en.Wedoany.com Reported - Slovalco has reached an agreement with the Slovak government, enabling the restart of 75,000 tonnes of primary aluminum capacity.

This agreement marks significant progress in Slovalco's return to full operations. The capacity was curtailed in 2022 due to high electricity prices. The agreement establishes the long-term framework conditions required for aluminum production, including a compensation mechanism for indirect carbon costs under the EU Emissions Trading System (EU ETS). Additionally, Slovalco has signed a long-term corporate Power Purchase Agreement (PPA) with Vodohospodárska výstavba, š.p.

Slovalco's restart decision remains subject to approval by the European Commission of the updated Slovak Indirect Carbon Cost Compensation (ICC) scheme.

Slovalco will invest €100 million to resume production, a move that will support over 200 jobs in the region. Aluminum production is expected to commence in the fourth quarter of 2026.

The aforementioned agreement enables the restart of the first 75,000 tonnes of the plant's total annual capacity of 175,000 tonnes. The restart of the remaining 100,000 tonnes will depend on framework conditions beyond 2030 and additional electricity contracts.

Eivind Kallevik, President and CEO of Hydro, stated that aluminum is crucial for the European economy, covering all sectors including power grids, renewable energy, transportation, defense, and infrastructure. The agreement regarding Slovalco is significant for Slovakia and for Europe as a whole.

EU aluminum capacity continues to face pressure from high energy costs and increasing global competition. Since 2022, 50% of EU aluminum capacity has been curtailed.

Kallevik stated that Slovalco is an energy-efficient aluminum plant with an annual capacity of 175,000 tonnes, with the potential to restore a significant share of the EU's domestic primary aluminum production. Restarting the smelter will enhance Europe's industrial resilience, reduce dependence on imports, and supply European customers with aluminum that has significantly lower carbon emissions than the global average.

Predictable and competitive framework conditions are essential for European aluminum production to remain competitive, particularly long-term access to affordable electricity and ETS-based compensation for indirect carbon costs, which global competitors do not bear.

Kallevik stated that European authorities must ensure a balanced policy framework so that tools such as the Carbon Border Adjustment Mechanism (CBAM) and ETS indirect carbon cost compensation can prevent carbon leakage and safeguard Europe's low-carbon industry.

Hydro holds a 55.3% stake in the Slovalco aluminum smelter, while Penta Investments Group holds 44.7%. The decision to curtail primary aluminum production at the plant was made in August 2022.