Another European aluminum smelter is closing, in a fresh sign of the damage wrought by an energy crisis that’s hammered the region’s industrial economy and crimped supplies of critical raw materials.
While power prices have retreated sharply from last year’s peaks, Speira Gmbh will shut its Rheinwork plant in Germany this year due to challenges in the energy market, the company said Thursday. That follows a 50% cut in aluminum production announced in September as soaring power and gas prices plunged Europe’s energy-intensive metals industry into an existential crisis.
Some smelters have been ramping back up in recent weeks, but the Speira shutdown is the latest sign of the obstacles politicians face as they seek to prevent a further wave of deindustrialization. They are also looking to shore up local supplies of critical industrial raw materials as global supply chains become more fragile.
Aluminum is one of the most energy intensive metals to produce, and European production capacity has fallen by more than half since the start of the energy crisis. Many plants have dialed back production, but others including Norsk Hydro ASA’s Slovalco plant in Slovakia and Alcoa Corp.’s San Ciprian plant in Spain have stopped producing entirely.
Like those plants, the Speira smelter will be placed on long-term care and maintenance, and could reopen eventually if the economics improve, a spokesman for the company said by phone. Yet restarting a smelter is slow and costly, and some plants in the region that closed in prior downturns have never reopened.
And they never will reopen. I said this before and I'll say it again, once this shit is gone it's not coming back. You physically can not bring it back under the current neoliberalism. They would have to abandon it if they sought to bring it back and I don't see that happening.
Neoliberals are all about merchantilism. Hell, that's the whole reason those smelters exist in Germany to begin with. They're entirely predicated on cheap energy imports from the Middle East and the Baltic/Slavic states.
Germans kept energy costs relatively low through the ECB's financial shell game. But now that a big chunk of their energy market is cut off from European market traders, there's no way to buy energy low and sell finished products high. You've got to do everything through the US (which has its own parasitic markets) or some black market in North Africa or Turkey (which adds a thousand layers of middle men no less parasitic).
They'd have to abandon efforts to continue balkinizing and digesting the former Soviet Bloc and come back to Clintonite capitalist realpolitik. That would mean treating Russia and China as international business partners rather than rogue states. So the Cold War die-hards can't bring themselves to do it.
But in another decade or two, we're going to have a new generation of German Pete Buttigiegs and Donald Trumps who are far more receptive to the allure of Russia cheap energy and Chinese tech. We're already seeing this shit in Italy and Hungary. Even Germany and France are looking askance at Biden's "Inflation Reduction Act" because of the way its just been exporting inflation into Europe.
There are plenty of Europeans who don't hold any love for predatory American corporate imperalists. They just aren't at the top of the political pyramid, atm. But if they can win a place back at the top of the pile, they absolutely could reverse course on fueling wars in the East and align with Moscow over DC.
That would bring back cheap energy and allow them to turn the machines back on at smaller but still healthy margins.
The problem with "turning the machines back on" is that when parts of the ecosystem disappear the knock on effects are enormous. Everyone that economically relied on being able to get something at x price within the country goes down with it, and everyone they supplied, and everyone they supplied. Segments of the chain disappear that were built over decades and decades. Without certain sections of the chain locally and with international competition it becomes impossible to rebuild economically without massive subsidy at an enormous scale over huge supply chains not just parts of the chain or nationalisation programs.
I think the reality is that they will simply never come back.
It's never going to be like it was, because the flow of trade has fundamentally shifted.
But a lot of that is a function of choice. German banks could recapitalize the factory and rebuild the supply chain. That's exactly what they did 70 years ago when Germany was bombed out the last time, and 90 years ago when it was bombed out the time before that.
The German state could nationalize the failed plants and do a little economic nationalism to re-cement them domestically.
That they likely won't is a consequence of ideology far more than economic possibility.
Exactly what I'm getting at.