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ECONOMY

Spain’s steel plants close over soaring energy prices

Acerinox became the latest steel producer to halt operations in Spain on Thursday due to surging energy prices caused by Russia's war in Ukraine.

Spain's steel plants close over soaring energy prices
Several steel plants in Spain have decided to halt production for several days. Madrid has for months urged its European partners to change the mechanism which couples electricity prices to the gas market. (Photo by Ina FASSBENDER / AFP)

A union source at the Spanish stainless steel maker told AFP the firm had halted production at its plant in Cadiz in the southern Andalusia region due to soaring electricity prices.

Electricity prices have hit record highs in recent days on the Spanish wholesale market, forcing Acerinox to push through plans to furlough all of its 1,800 staff at the Cádiz plant, he said.

The unions, he said, were currently in talks with management to “negotiate the terms” of the so-called ERTE furlough scheme.

The move came after a year in which the steelmaker’s net profits soared to a record €572 million on surging global demand.

Earlier this week two ArcelorMittal factories, both in the northern Basque Country, halted production over surging energy prices, a spokesman for the global steel giant told AFP.

One plant located in Olaberria, with a 400-strong workforce, shut down for 15 hours on Tuesday due to “high electricity prices” which are weighing on production costs.

It resumed operations on Wednesday “but only intermittently” during off-peak hours when electricity prices were lower, he said.

The group decided not to resume activity at a second factory with a 200-strong workforce in Sestao where operations had been due to resume Sunday after being idle for four days.

A truck is seen at ArcelorMittal steel company in the Spanish Basque city of Olaberria on March 10th, 2022. Several steel plants have halted operations in Spain due to surging energy prices caused by Russia’s war in Ukraine. (Photo by ANDER GILLENEA / AFP)

“We’re following the price closely every day but we still don’t know how long this situation of exorbitant prices is going to last,” he said.

According to another industry source, “other steel plants” have also decided to halt production for several days, such as the Spanish group Megasa.

Madrid has for months urged its European partners to change the mechanism which couples electricity prices to the gas market but its pleas have so far fallen on deaf ears, despite support from Paris.

But since Russia’s invasion of Ukraine, positions have shifted with the question of electricity prices to be discussed at a two-day EU summit at Versailles near Paris which began on Thursday.

In a statement, Fernando Soto, head of AEGE, which represents energy-intensive companies, urged the Spanish government to introduce “emergency measures”.

“Energy-intensive industries in Spain are suffering from the rising costs of electricity supplies” which have reached levels “never before seen in our market,” he said on Wednesday, warning the sector’s activity was “at serious risk”.

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ECONOMY

Qatar to invest an extra €4.75 billion in Spain

Qatar on Wednesday said it plans to invest an additional $5 billion (€4.75 billion) in Spain on the second day of a state visit by its emir, Sheikh Tamim bin Hamad Al-Thani.

Qatar to invest an extra €4.75 billion in Spain

“The volume of investments agreed upon with the Spanish side amounts to $5 billion in various sectors,” said Qatari Foreign Minister Mohammed bin Abdulrahman Al-Thani in a statement tweeted by his ministry.

Neither side gave a timetable for the investment, which amounts to some €4.75 billion, nor did they say which sectors would benefit.

“Qatar will invest close to five billion euros in our country in the coming years,” Prime Minister Pedro Sánchez said during a business meeting with the Qatari delegation.

“It is a gesture of confidence in the Spanish economy and Spanish businesses which will strengthen bilateral ties,” he said ahead of afternoon talks with the emir.

Before the pandemic, Qatari investment in Spain stood at €2.67 billion ($2.8 billion), the Spanish government said, making it the country’s 24th biggest investor.

To date, Qatari funding has been notably invested in several sectors: civil aviation, construction, energy and communications.

According to a Spanish government source, the two sides will on Wednesday sign around a dozen commercial contracts, notably concerning energy as Madrid seeks to diversify its gas supplies following Russia’s invasion of Ukraine.

Qatar, one of the world’s three biggest exporters of liquified natural gas (LNG), is currently Spain’s fifth-largest supplier after the United States, Algeria, Nigeria and Egypt.

The country accounted for 4.4 percent of Spain’s total gas imports in April and the Spanish government hopes to increase this share.

European states are increasingly looking to other sources of natural gas as they try to wean themselves off dependence on Russia, with LNG easily shipped by boat from countries such as Qatar and the United States.

After Madrid, the Qatari leader will continue his tour of Europe, visiting Germany, Britain, Slovenia and Switzerland, where he will attend the World Economic Forum in the mountain resort of Davos which runs from May 22-26.

Qatar will host the World Cup later this year.

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