Trafigura CEO: Europe's smelters require long-term protection of prices

Trafigura CEO Richard Holtum said that European smelters require "life support", such as price floor protection or long-term price protection, to keep running and compete with the top-end Chinese plants.

The European Union and its Western allies are working to diversify supply chains in order to reduce the over-reliance of their industries on China, especially for minerals that are crucial to the tech and defense industries.

Holtum stated that the EU's existing metal smelters can be used to produce strategic minor materials, such as antimony for defence.

Holtum said at the EIT Raw Materials Summit held in Brussels that "Europe has an incredible edge today, because it has billions and millions of dollars in sunk costs in these smelters. But Europe has lost 30 percent of its smelting capability in the last ten years."

"Smelters are supported by the state globally, but not in Europe. We're hampered by high prices for energy, carbon taxes and high costs of employment. We need government assistance to be competitive.

Holtum stated that Trafigura’s smelting firm Nyrstar produces indium at its zinc smelter?in France as a by-product, but the potential of other sites are not being tapped as they should, Holtum added.

A certain amount of European funding is allocated to smelters such as the Greek alumina-smelter Metlen. However, the overall pace remains slow, despite promises from the European Commission to speed it up. Investors are still wary about China's dumping of cheap metals to compete with other countries.

The Group of Seven and its allies want to find solutions to protect their diversification investment. Financing is still a difficult issue.

Holtum stated, "I hope the EU does not search for perfection. If it does so in five years time the smelting sector will be gone." (Reporting and editing by Andrew Heavens, Emelia Sithole Matarise, and Julia Payne)

(source: Reuters)