The European aluminium industry is strongly hit by the regulatory costs on energy

• A study conducted by the Centre for European Policy Studies concludes that the impact of the cumulative costs due to EU rules on price-cost margin was of 242% in 2011
• The plants in Romania pay the highest prices for RES and cogeneration within the EU

Slatina, 7 November 2013 – Alro SA (BSE: ALR, “The Company” or “Alro”), one of the largest aluminium producers in Central and Eastern Europe, salutes steps taken at the European Union level in respect to evaluate the burden of the regulatory costs on the aluminium industry. The Centre for European Policy Studies (CEPS) released the assessment of cumulative cost impact for the aluminium industry. The study concludes that the impact of the cumulative costs due to EU rules on price-cost margin was of 242% in 2011. The study finds that at the EU level the plants buying electricity from the market registered the highest impact on costs, with a range in 2012 from EUR 179/tonne to EUR 228/tonne. For Alro, the taxes for renewable energy and cogeneration alone are in 2013 of approx EUR 18/MWh, meaning an impact of EUR 260/tonne.

“The assessment comes to confirm, yet again, that the electricity has a crucial role for the competiveness of the aluminium industry”, said Gheorghe Dobra, CEO of Vimetco and General Manager of Alro Slatina.“Moreover, the direct and indirect costs both from electricity and from environment regulation further burden the already hard-hit industry and affect its international competiveness.”

The assessment covers the cumulative regulatory costs deriving from three main policy areas: climate change, energy and environment. The cumulative costs – CO2 price passed on through electricity price, transmission costs and RES (renewable energy) taxes, and the environment investments – represented about 23% of the profits in 2006, and 242% in 2011, and were constantly higher than the profit from 2009 onward.

Although the assessment finds that the companies having long-term electricity supply contracts have lower regulatory costs, Romanian units stand closer to the companies that buy electricity directly from the market. Romania has high RES support costs, the assessment quoting a PriceWaterhouseCoopers study that estimates that the intensity of support for the wind energy is 224% of the EU average.

The assessment includes a comparison between 10 aluminium plants at the EU level, from France, Greece, Germany, Romania, Slovakia, Great Britain, Spain etc. The results show that Romania pays the highest price for RES and cogeneration – 10.7 EUR/MWh, in 2012, while most EU countries have a merit-order and exemptions for big industrial consumers.

Besides the RES and cogeneration taxes, that reach 18 EUR/MWh in 2013, Alro may also incurs other costs, as indirect emissions, included in the electricity price, thus increasing the total impact to a level much higher than the maximum of EUR 228/tonne of aluminium, registered in the EU in 2012 by the plants that buy electricity from the market.

The assessment shows that “although the EU has set mandatory targets for the national share of electricity to be generated through renewable sources, EU policies do not specify the amount of support for RES, nor how this burden should be shared among different segments of customers, including large industrial customers”.

Therefore, Alro proposes a series of measures to support the Romanian aluminium industry, which accounts for 10% of the EU aluminium output. Thus, the Company applauds the first step taken by the authorities in including the possibility to offer exceptions from additional taxes on electricity depending on the electricity consumption in GUO 57/2013, but urges the authorities to prepare as soon as possible the qualification standards, as per the examples of the EU countries.

Moreover, Romania has to implement the EC norms regarding the compensation of the indirect emissions and to finalize the necessary regulations for the energy platform for the big industrial consumers. 

Alro is the biggest electricity consumer in Romania, with about 8% of the total output. The Company employs over 2,400 people and is responsible for at least 20,000 other employees. Alro paid over USD 462 million (EUR 355 million) taxes to the state budget from 2002 to 2012.

For further information please contact:

www.alro.ro

Florenta Ghita
Premium Communication
Bucharest
Phone +40 (0) 21 411 01 52
Email florenta.ghita@premiumpr.ro

Notes to the Editors:

Alro is a subsidiary of Vimetco N.V., a global, vertically-integrated primary and processed aluminium producer. Alro is one of the largest aluminium producer in Central and Eastern Europe measured by volume with an installed production capacity of 265,000 tonnes per year.

The main markets for the aluminium manufactured by Alro are within the European Union (i.e. Hungary, Poland, Greece, Germany and Romania). Alro also exports to the U.S.A and Asia. Alro is ISO 9001 certified for quality management and has NADCAP as well as EN 9100 certificates for aerospace production organizations. Alro’s products adhere to the quality standards for primary aluminium on the LME, as well as to the international standards for flat rolled products.

The contents of the website www.alro.ro are not incorporated into, and do not form part of, this announcement.