Vimetco NV Aluminium Romania Alro reputation challenged with electricity court case
The company is part of the 7th largest aluminium producer worldwide, Vimetco NV, which has operations in Romania, China and Sierra Leone. Alro’s shares are traded on the Bucharest Stock Exchange.Alro’s primary aluminium facilities are located in Slatina and currently comprise a smelter and processing facilities, including a cast house, hot and cold rolling mills and an extrusion shop. The company is also owner of Alum S.A. an alumina refinery based in Tulcea.
Alro SA one of the largest aluminium producers in Central and Eastern Europe, reaffirms its position that the Company had a correct commercial relationship with Hidroelectrica, complying with all the legal requirements that regulate the energy sector in Romania.
The Company took note of the conclusions of the Competition Council investigation regarding the contracts signed with Hidroelectrica, including the sanction imposed to the Company, of RON 21,238,718.99, or 1.05% of its turnover for 2014. Alro didn’t conclude any horizontal or vertical agreement regarding the contract analyzed by the Competition Council.
Alro will take all the legal measures necessary and will act towards demonstrating, once again, that in relation with the energy producer, it acted in full compliance with the requirements in place.
Being a final energy consumer, Alro didn’t resell electricity, but used it exclusively in the Group’s aluminium production process. Moreover, there is no precedent, in the European jurisprudence, regarding sanctions against a final electricity consumer for vertical agreements for market closing via long term contracts.
The Company has a unique electricity consumption profile in Romania, pays in advance for its electricity supply, allowing its supplier access to a guaranteed financial flow to finance its operational and investment activities, without any collateral over its fixed assets and receivables.
Alro reminds the public that these contracts were the object of an investigation conducted by the European Commission (EC) in a file that targeted a potential “preferential electricity tariffs”. After an in-depth analysis, conducted over several years, the EC concluded “Hidroelectrica charged prices that were fully in line with the benchmark market price”.
As per the EC press release sent out on June 12th, 2015, “following an in-depth investigation, the European Commission has concluded that electricity supply contracts signed by the state-owned Romanian electricity generator Hidroelectrica with certain electricity traders and industrial customers did not involve state aid within the meaning of the EU rules”.
As per a study conducted by the Centre for European Policy Studies (CEPS), the electricity tariff paid by Alro is 4.5 times higher than the lowest price paid by an European company and three times higher compared to the European average.
Alro activates on a highly competitive international market, where some aluminium smelters shut down over the past years, precisely because of unsustainable electricity costs. The Company exports over 70% of its production, and high, uncompetitive prices with electricity determined Alro to shut down 25% of its production capacity.
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