Faced with too expensive energy, companies stop producing

Faced with too expensive energy, companies stop producing

The next few months are going to be difficult for Aluminum Dunkirk. The largest primary aluminum smelter in the European Union and the leading industrial site in France in terms of electricity consumption (4 TWh) could soon reduce its production by 20%, due to rising oil prices. At the end of last year, it had dropped by 15%. “In September 2021, our electricity bill was 17 million euros. This month, it should exceed 45 million, or half of our production costs.” explains its president, Guillaume de Goÿs.

It is true that the company benefits from the Arenh system, the nuclear electricity sold at cost price by EDF, which represents 75% of its electricity supply, but that is no longer enough. Like many other manufacturers, the head of Aluminum Dunkirk should buy the necessary supplement on the wholesale market. However, for delivery in the first quarter of 2023, the megawatt hour (MWh) is currently worth €1,150, compared to €70 or €80 in 2019.

“We can’t pass our costs on to our customers, otherwise they will go elsewhere, Guillaume de Goÿs stresses. Imports of primary aluminum have already increased considerably from Iceland, Norway and the Middle East. We even see some arriving from India, Indonesia and Australia, with a poor carbon footprint. » Clearly, less production in Europe, but more pollution on a planetary scale.

Switch to oil to save gas

This is also to be feared after ArcelorMittal’s announcement, on Friday September 2, to stop two of its blast furnaces, in Bremen (Germany) and Gijón (Spain). “The costs of gas and electricity weigh heavily on our competitiveness”, secure the group. In France, steel production has already slowed down significantly. “In fertilizers, 70% of the production capacity is paralyzed. And imports are increasing, especially from the United States and the Maghreb”, says Magali Smets, director general of the France Chimie federation.

Glaziers are also in great difficulties. Loiret-based Duralex will put its kiln on standby for a minimum of four months from November and all 250 employees will go on partial unemployment. “Limiting our energy consumption allows us to preserve activity and employment”, assures the president of Duralex, José-Luis Llacuna.

The same scenario is outlined in the Arques glass factory (Pas-de-Calais), where the first drastic measures have just been taken. “We have decided to put the company in winter mode”, explains its director of communication, Guillaume Rabel-Suquet. Employees working in support functions, that is, 1,600 people out of 4,600, have been placed on partial unemployment two days a week since 1Ahem September and until December. “But for production, we are likely to resort to partial activity during the winter as well.” warns Guillaume Rabel-Suquet.

The shop window has seen its gas bill go from 19 million euros last year to 75 million this year and says it is forced to react as quickly as possible. In some ovens, maintenance will be brought forward to be effective this winter, in order to save energy. At the same time, other furnaces will be converted to fuel oil to limit gas purchases.

SMEs can no longer find electricity providers

No sector is spared today from the violence of this energy shock. “We do not rule out stopping the exploitation of certain quarries, or even moving the activity to the night when electricity is cheaper”, says Xavier Breffeil, Deputy Director of Purchasing at Basaltes, one of France’s independent aggregates groups.

For many SMEs, in addition to the price, the problem is also finding electricity for the next year. “Many suppliers are withdrawing from the market because they are having trouble supplying themselves. They don’t want new clients and they’re afraid they won’t get paid.” explains Charlie Évrard, director of My energy broker.

“If nothing is done, the situation will be dramatic”, says Frank Roubanovitch, president of Cleee, an association of large industrial and tertiary gas and electricity consumers. The general director of France Chimie, Magali Smets, asks the State for exceptional support, like the one that has been given to individuals.

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state support

Companies affected by the consequences of the war in Ukraine – in particular the rise in energy prices – can benefit from the partial activity regime, which opens the payment by the State of part of the remuneration of employees on leave.

The Government has also released an allocation of 3,000 million euros to support the companies most exposed to the energy crisis. But the overly complex device discouraged applications and only €500,000 was awarded. The Minister of the Economy, Bruno Le Maire, has promised to simplify the system.

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