High power prices threat snuffing out aluminium growth

Britain’s aluminium industry is urging ministers to tackle sky-high energy costs preventing them from cashing in on a supply crunch sparked by the Iran war.

Aluminium plants in the Gulf have been knocked out of action and exports blocked, causing a spike in global metal prices.

It has caused a surge in demand at the UK’s only aluminium smelter in Fort William, Scotland, and recycling plants in England and Wales. But bosses warn any windfall will be short-lived if Ministers do not tackle the soaring cost of electricity, noting UK prices last year were 50 per cent higher than in France and a third higher than in Germany. 

Industry body Make UK said: ‘Manufacturers need Government action to tackle industrial electricity prices, and we need it now.’

The sector wants plans to cut electricity costs for energy-intensive businesses by 25 per cent, which are only due to be launched in 2027, to be brought forward and backdated to apply from this month.

Aluminium makers also want targeted schemes guaranteeing an electricity price over a period of time to boost those that switch to electric power from fossil fuels.

Struggle: Britain’s aluminium industry is urging ministers to tackle sky-high energy costs preventing them from cashing in on a supply crunch sparked by the Iran war

Nearly a tenth of the world’s aluminium – used to make everything from aircraft to drinks cans – is made in Bahrain and the United Arab Emirates. But exports from both have been disrupted in recent weeks by Iranian attacks and the blocking of shipping through the Strait of Hormuz.

It has provided a golden opportunity for Britain’s aluminium sector, which employs 17,000 people and contributes £2 billion a year to the economy. The sector benefits too from favourable US tariffs on imports of British aluminium, set at 25 per cent against 50 per cent for other countries.

But Louise Young of Make UK warned that high power costs were ‘suppressing that potential and limiting UK production growth’, adding: ‘It is simply not viable in many cases to make more aluminium here if electricity prices continue to rise, overwhelm gains in metal prices, and chip away profit margins.’ 

Her comments come after Tom Uppington, head of the Alvance British Aluminium smelter in Fort William, said while its production had been upped by 10 per cent to 70 per cent of its 48,000-ton annual capacity, it could not increase output further as high energy costs would mean the plant would run at a loss.

A Government spokesman said: ‘We’ll shortly confirm eligibility details for plans to cut electricity bills by up to 25 per cent for more than 7,000 businesses.’