Europe's smelters need long-term price protection, Trafigura CEO says
By Julia Payne
Challenges and Opportunities for European Smelters
Need for Price Protection and Government Support
BRUSSELS, May 20 (Reuters) - European smelters need "life support" such as long-term price protection or price floors to keep operating and compete with top-end Chinese plants, Trafigura's CEO Richard Holtum told a conference on Wednesday.
Competition with China and Strategic Importance
The European Union and its Western allies are racing to diversify their supply chains and reduce their over-reliance on China for minerals crucial in the tech and defence industries.
Harnessing Existing Smelters for Strategic Metals
The EU's existing smelters could be better harnessed to produce strategic minor metals such as antimony needed in defence, Holtum said.
"Europe today has an incredible advantage, because it has billions and billions of dollars of sunk cost capital in the ground in these smelters, but Europe has lost 30% of its smelting capacity in the last decade," Holtum told the EIT Raw Materials Summit in Brussels.
Barriers Facing European Smelters
"There is state support for smelters globally and not in Europe, where we are hampered by high energy prices, by carbon taxes, by high employment costs. And in order for us to compete, we need government support."
Examples of Smelter Potential and Funding
For instance, Trafigura's smelting company Nyrstar already produces indium as a side product at its zinc smelter in France but the potential at other sites is not being exploited as it should be, Holtum said.
Some European funding is being allocated to smelters, such as to Greek alumina smelter Metlen, but the overall pace remains slow despite European Commission promises to accelerate it. Niche metals markets remain opaque and investors remain wary of China dumping cheap product to undercut the competition.
International Response and Future Outlook
The Group of Seven nations and allies are looking to come up with solutions to protect their diversification investments and financing remains a thorny issue.
"I hope the EU doesn't search for perfection and creates perfection in five years' time and the smelting industry has gone," Holtum said.
(Reporting by Julia Payne; Editing by Andrew Heavens and Emelia Sithole-Matarise)
