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Smelter boss says high energy costs preventing production boost

Eilidh DaviesBBC Scotland News
Alvance British Aluminium A view inside an area of the smelter called the potroom. An operator dressed in protective clothing uses a remote control to tip a large pot of molten metal into another pot, which is on the back of a trailer pulled by a tractor. Alvance British Aluminium
Production is at 70% at the Lochaber smelter

The owners of the UK's only aluminium smelter say the high cost of energy is preventing them from increasing production at the Fort William site.

Alvance British Aluminium managing director Tom Uppington said long-term energy deals would help to protect against volatility in the market.

He told BBC Radio 5 Live - Wake Up to Money costs of aluminium had surged to a four-year high due to the US-Israel war with Iran, and airstrikes on two major ​Middle East producers over the weekend.

The metal is widely used in industries from car-making to aerospace and buyers have been searching for alternative sources, including from Alvance's site where production is at 70%.

Making aluminium is energy intensive and a significant number of smelters have closed over the last 50 years in both the US and the UK, often due to high electricity costs.

The Fort William plant, which has been owned since 2016 by the GFG Alliance, draws on power produced by its own hydro-electric scheme.

However, to increase production it would need power and have to import electricity.

The site has a smelting capacity of 48,000 tonnes per annum - which is equivalent to producing about three billion soft drinks cans a year.

It employs just over 200 workers.

'Energy on our doorstep'

Uppington said it was "very difficult" to try and plan a business when there was "so much volatility".

He said: "The metal coming out of the Middle East is becoming more and more challenged.

"We've been approached quite a few times in the last few days after the attacks in the Middle East on the smelters to see if we can provide any more metal, but the price of energy is preventing us from increasing our production.

"We are only at 70% just now because of the cost of energy."

He said if they were to go above that, they would have to import power, which he said at the current prices was not cost effective.

He added that if industry had access to long-term energy deals that could help.

"When you're exposed to these global prices when we've got significant energy on our doorstep - why aren't we taking more advantage of that, where we can tie something in for 10, 15, 20 years," he said.

Alvance British Aluminium The metal is stacked in a yard. A heavy goods lorry and parts of the smelter plant, along with Ben Nevis, are in the background.Alvance British Aluminium
Aluminium produced at the smelter for export to the USA

Earlier this month the smelter increased its production by about 10% after exporting to the US for the first time.

It said US tariff changes had opened up new opportunities for its plant in Fort William.

Last year, President Donald Trump imposed a 50% global tariff on imports of steel and aluminium with the UK being the only country to get a preferential lower rate of 25%.

About half of the aluminium produced at the smelter is now being exported to the US.

The GFG Alliance scrapped its proposals for an alloy car wheels factory in 2020 due to a "significant decline" in car manufacturing.

Smaller scale plans for an aluminium recycling plant have also been delayed.