Aluminium, the EU duty is harming Europe

[Link to original article here, translation performed by CONSENSO]

As regards the aluminium industry, a measure taken 60 years ago to protect continental production of a metal that no longer exists has turned into a hidden subsidy affecting the competitiveness of the downstream industry. Aluminium is applied in several sectors such as construction, automotive, and in an infinite range of products, from robotics to coffee makers. In the 1960s, Europe was a major producer and an even bigger consumer of aluminium, for this reason the EU institutions decided to impose a tariff to protect the inner production of the unwrought metal. However, throughout the years, larger producers have been relocating outside the EU as the cost of energy harms primary production. These producers moved to countries where energy was cheaper: Russia, Canada and the Gulf States. Today, European industry is consuming 12 million tonnes of unwrought aluminium per year, while it imports 74% of primary metal. However, the duty has remained and has turned into an extra cost for the downstream industry which accounts for about a thousand companies 90% are SMEs with an aggregate turnover of about 56 billion euro EU+EFTA on 2018 ( in Italy about 12, second only to Germany). These companies have to sustain the extra cost of the import duty that accounts for almost €1 billion per year and, since the unwrought material represents between 60% and 80% of costs, European companies have gradually lost competitiveness.

“The EU share of world production of semi-finished aluminium products amounted to 29% in 2000. It dropped to 14% in 2017,” explains Roger Bertozzi, an experienced manager of international economic diplomacy. Bertozzi worked in the WTO and the UN and he is the co-founder of Face, the Federation of Aluminium Consumers in Europe that has been fighting for the abolition of the duty since 1999. “ This extra cost is dangerous, especially in comparison with the non-EU competitors, mainly coming from China and India, which are not affected by the duty on unwrought metal. EU companies are working with ever lower margins and cannot invest in digital and energy transition. Hence, the NRRP should not only focus on ‘green steel’, but it should also refer to ‘green metal’, including aluminium.”

For more than 20 years FACE, which is also supported by the German aluminium downstream industry, like the association BWA, has addressed European Institutions that still don’t want to abolish nor lower the duty. Currently, recycled aluminium producers (3 million tonnes of EU output) cannot completely replace unwrought primary aluminium: “at most it can satisfy 40-50%
of European needs, but the recycled material is not valid for all uses,” comments Mario Conserva, Secretary General of FACE, who has been working in aluminium since 1960.

Furthermore, Conserva added that while in past years this European ‘aid’ to producers may have helped the last European smelters, today there is no longer that reason. Alcoa, the world aluminium giant, closed the last of its four Spanish plants. In Italy, a site such as Portovesme in Sardinia – that employs fossil fuels – is out of business without subsidies, mainly because with its 140,000 potential tonnes per year it is seven times smaller than the average size of a non-EU plant.

Within this framework, the European downstream industries only require that EU institutions adopt appropriate industrial policies, other than customs duties that are, in fact, hidden subsidies. “An example of a fair industrial policy may be encouraging the use of green aluminium: Russian aluminium is produced employing hydroelectric power, in the Gulf solar energy is used. At least, when the EU develops carbon offset mechanisms, companies will save on compensation costs by using green aluminium”.

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