By Tom Daly

Norsk Hydro OSL:NHY said on Wednesday its Slovalco aluminium joint venture had reached an agreement with the Slovak government to partially restart production after a four-year shutdown, including a new long-term power supply contract.

The deal paves the way for the restart of 75,000 metric tons per year of smelting capacity, with production expected to resume in the fourth quarter of 2026, Hydro said.

Restoring the remaining 100,000 tons of capacity would depend on conditions beyond 2030 and additional power contracts, it added.

The resumption of primary aluminium production at the plant, in Ziar nad Hronom in central Slovakia, would be a boost for the European market, which has been left short of metal by the closure of the Mozal smelter in Mozambique, the EU's new carbon tax and war-driven supply constraints in the Gulf.

Slovalco – owned 55.3% by Norway's Hydro and 44.7% by Central Europe-focused Penta Investments Group – was forced to stop primary aluminium production in September 2022 as high power prices left the joint venture facing financial losses.

The deal sets out the "long-term framework conditions" for aluminium production, including a power purchase pact with state-owned hydropower utility Vodohospodarska Vystavba and a compensation scheme for indirect carbon costs under the EU Emissions Trading System (ETS), Hydro said.

CUTTING IMPORT DEPENDENCE

Slovalco will invest €100 million ($114 million) to resume operations, which will support more than 200 jobs, it added after a signing ceremony in Bratislava on Wednesday.

"With a production capacity of 175,000 tons per year, Slovalco has the potential to restore a meaningful share of the EU's domestic primary aluminium production," Hydro CEO Eivind Kallevik said in a statement.

"Restarting the smelter will strengthen Europe's industrial resilience, reduce dependence on imports and supply European customers with aluminium carrying significantly lower carbon emissions than the global average," he added.

In a televised press conference, Slovakia's Prime Minister Robert Fico described Slovalco as a strategic supplier to the country's automotive industry and blamed its long absence on "overly ambitious" EU climate targets.

These had led to higher aluminium imports from China, where the metal is produced with a greater environmental impact, Fico said, adding that Slovalco's power supply contract was for 10 years.

($1=0.8777 euros)

($1 = 0.8775 euros)