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French aluminum smelter to cut output as electricity prices soar

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PARIS — France’s biggest aluminum smelter on Tuesday said it will reduce production by a fifth in response to soaring energy prices while unions at other metallurgical companies reported plans to curb output and shift working times .

Companies across Europe have lowered output as power costs fanned by a drop in Russian gas supply have hurt margins for energy-intensive industries.

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Aluminum Dunkerque, which consumes as much electricity as Marseille, France’s second largest city, said it will lower its production by about 22% in the fourth quarter.

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This will be achieved by stopping 54 of the smelter’s electrolysis tanks and by reducing the intensity of others, Guillaume de Goys, chief executive of Aluminium Dunkerque, told Reuters.

“Given the extremely sharp rise in electricity prices we are forced to limit our production,” he said by telephone.

Although the site is covered for most of its electricity consumption by preferential tariffs under a French nuclear power scheme called “ARENH,” the portion of power it secures at market rates threatened to put it into the red, he said.

A record number of reactor outages at French nuclear power plants, long a source of cheap energy, have exacerbated electricity price increases.

The government earlier this year forced state-owned utility EDF to sell more nuclear power at a reduced price, which de Goys said had allowed Aluminium Dunkerque to reverse a 15% output cut it made last winter following a previous electricity price surge.

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The smelter’s production prospects for next year will depend on ARENH arrangements, nuclear power availability and discussions at French and European Union levels to reform energy markets, de Goys added.

The smelter, located near the northern French port of Dunkirk, is one of Europe’s biggest aluminum production sites, with annual capacity of nearly 290,000 tonnes. It employs more than 600 workers and electricity usually represents about a third of its production costs.

Private equity firm American Industrial Partners (AIP) acquired the smelter last year following a debt default by a unit of previous owner GFG Alliance.

At Ascometal, part of Swiss Steel, CGT union representative Gazi Yildiz said the company planned to halt production at its Hagondange and Fos-sur-Mer sites for up to three weeks in December, and would also shift the working week more towards the weekend to lower the electricity bill.

At ArcelorMittal, the company planned to use a state-subsidized furlough scheme for workers on some production lines while also bringing forward a renovation stoppage for one of the furnaces at its Dunkirk plant, according to several union officials, who said the group cited a drop in demand as well as rising energy costs including for gas.

Neither ArcelorMittal nor Swiss Steel were immediately available for comment. (Reporting by Caroline Pailliez and Gus Trompiz; editing by Richard Lough, Louise Heavens, Alexandra Hudson)

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