Spain's government has said it will draw up legislation before year-end to help its metal industry face up to increased cost pressure from energy prices, with action expected before the end of the year.
The Industry and Ecological Transition Ministries held meetings last week with regional governments and representatives of US aluminum group Alcoa, a spokesman for the Ecological Transition Ministry told S&P Global Platts Monday.
The meetings come amid a growing wave of popular pressure for Alcoa to reverse the announced closure of two of its three Spanish plants.
During the last week, thousands of citizens of Aviles and Coruna, where the plants are located, have marched on the streets to signal their opposition to the closure, which has been largely blamed on excessive energy costs, although official industrial action has not been called yet.
In the face of this, and as a means of reaching a negotiated settlement, the Industry Ministry said it will act before year-end, in terms of "measures for high energy consuming industries -- in particular the interruptible supply auctions and compensation for CO2 costs," and will also put pressure on Alcoa to "withdraw the redundancy plan" drawn up for the nearly 700 workers directly affected.
The Alcoa spokesman said the process to negotiate a solution is around halfway through its 30-day period.
If there is no agreement in that consultation period, Alcoa would have to wait a further two weeks before formalizing the closure of the 87,000 mt/year Corunna smelter and 93,000 mt/year the Aviles smelter.
"Large energy consuming industry needs energy costs that are competitive with other locations and have visibility," the spokesman said.
The future the 228,000 mt/year San Ciprian plant seems more assured, with Alcoa having previously said that after analysis of its operations it found organizational improvements could be achieved by centering production at the site, where both alumina and aluminum are produced in a more modern setting.
The government did not provide more details about the measures it will undertake to try and reach a solution.
The interruptible contracts previously offered a chance for large consumers, led by metal and chemical producers, to buy their energy at a fixed cost for a year at a time.
However, the workings of the mechanism have been changed in the last two years, partly amid changes in government, which has meant the measure has been altered to cover shorter periods and smaller lot sizes, and been applied more frequently.
As a result, large industries have been less able to secure supply further out on the supply curve, while production has been prone to sudden interruptions when the contracts are applied during periods of energy price spikes, resulting in lost periods of productivity.
In terms of CO2 permits, there is a backlog of awards from 2016-17, amounting to around Eur150 million ($169 million) that may be awarded to some of the industries, which could be used to sweeten any deal with the large producers.
