Aluminium Dunkerque, France’s largest aluminium company, is facing a major capital adjustment, according to a Reuters report from Paris. U.S. investment firm American Industrial Partners (AIP) has disclosed to plant workers’ representatives that it plans to sell the aluminium plant or push it to go public, corroborating previous Bloomberg reports.
Back in the background, Aluminium Dunkerque is an asset that AIP took over four years ago. AIP took the opportunity to acquire the aluminium plant when GFG Alliance, owned by commodity giant Sanjev Gupta, was in debt default. AIP’s spokesperson in France did not deny media reports about the current sale or listing plans, but gave no further details for the time being.
It is worth noting that there were early signs of the capital change. In May, Aluminium Dunkerque signed a 10-year power supply contract with Electricite de France (EDF), locking in long-term cost expectations for the energy-intensive company. John Frittik, a representative of the French General Confederation of Trade Unions (CGT), said the union had anticipated from then on that the aluminium plant might face a sale. As of now, workers’ representatives have not received any takeover offer for the aluminium plant, and the confederation has made it clear that it hopes the French government will participate in the investment as a member of the consortium to support the development of the aluminium plant.
Aluminium Dunkerque, the leading aluminium company in France, has significant business data. It produces about 300,000 tons of primary aluminium a year, and its annual electricity consumption is comparable to that of Marseille, the second-largest city in France. The company’s annual turnover has exceeded 800 million euros (equivalent to 921.4 million US dollars, about 6.587 billion yuan), according to information on its official website. However, behind the impressive figures, the aluminium plant is under severe pressure from energy costs.
Since the outbreak of the Russia-Ukraine conflict, France has lost cheap energy supply from Russia, and domestic electricity prices have soared. Aluminium Dunkerque’s chief executive Guillaume de Goys has admitted that to break even, electricity prices need to be controlled at around 250 euros per megawatt-hour, but the current market price is much higher than that – the French base load electricity futures trading price until mid-2024 Both remain above 300 euros per megawatt-hour. In response to cost pressures, Aluminium Dunkerque has announced rare production cuts: by closing 54 electrolyzers and reducing the operating intensity of the rest, the overall reduction reached 22 percent. The scale of production cuts is rare in the European aluminium industry and directly reflects the strong impact of the energy crisis on the European aluminium sector.