GFG's renewable energy drive could support Spain metals investments

SIMEC Energy, a subsidiary of London-based GFG Alliance, has signed an agreement with IGNIS, a renewable energy project developer in Spain, to create what is described as Spain's largest renewable energy program for energy intensive industries.

This is GFG's first investment in Spain, and may indicate an intention to develop into metals or steel in the Iberian nation.

The partnership will invest in the development, construction, operation and maintenance of wind and solar generation capacity of around 1.2 GW, steel, metals and energy group GFG said in a statement Oct. 1. The wind projects will be located in Galicia, Northern Spain and the solar projects more broadly across Spain with planned completion by 2023, it said.

The announcement would appear to rekindle the possibility of GFG investing in aluminum in Spain, specifically the troubled San Ciprian smelter for which US aluminum company Alcoa is seeking a buyer.

The joint venture with IGNIS "is focussed on supporting GFG Alliance's plan for growth in Spain in energy intensive industries through a highly competitive offering of long-term Power Purchase Agreements...as well as its target to be carbon-neutral by 2030," GFG stated. "There are a number of areas where SIMEC's affiliated companies, ALVANCE Aluminium and LIBERTY Steel, are reviewing significant investment programmes," it said.

Liberty has in recent weeks been involved in negotiations with Alcoa and the Spanish government on a possible purchase of Alcoa's San Ciprian aluminum smelter in Galicia. While an official deadline of Sept. 28 for a conclusion of the talks did not bring any agreement, sources close to GFG indicate that the group still wishes to find a viable solution for the future of the 228,000 mt/year smelter, where recent losses have been attributed to uncompetitive energy costs. The site is Spain's single largest power consumer.

Alcoa said this week that trade unions declined to agree to a social plan Sept. 28, requiring the company to make a decision regarding the smelter's future within 15 days as required by Spanish government regulations.

Both SIMEC and IGNIS have experience of delivering and operating renewable energy projects: SIMEC has around 600MW of existing capacity and is developing a further 2GW of renewable energy plants, including a 280MW capacity solar farm in South Australia, a 160MW onshore wind farm in Scotland and an end-of-life waste to energy facility in Wales. IGNIS has developed and currently maintains a 725MW solar farm in Aragón, the largest in Europe, operates and delivers energy management services to 2.7GWs of power generation assets, and currently has a renewable development portfolio of more than 10GWs.

Commenting on the agreement, Sanjeev Gupta, GFG Alliance Executive Chairman, said: "This is a very exciting first step into Spain for GFG. This joint venture is firmly aligned with our ambition to be carbon neutral by 2030 and could bring enormous economic, environmental and social benefits to the Galician region and to Spain more widely. We have proved our ability to develop, finance and build these projects elsewhere across the world and look forward to combining our expertise with that of IGNIS to do the same here in Spain."

IGNIS CEO Antonio Sieira was cited as saying that "the joint venture will contribute to assure the competitiveness and long-term viability of key manufacturing sites of the Spanish energy intensive industry."

Liberty has significantly expanded its aluminum interests over the last two years. Its aluminum assets, including Europe's biggest (280,000 mt/year) aluminum smelter in Dunkirk, France, bought from Rio Tinto, the UK's sole smelter at Fort William, Scotland, and downstream assets have, in recent months, been consolidated into the Alvance Aluminium Group.

Alvance completes Duffel rolling mill purchase

GFG also announced Oct. 1 that Alvance has completed its purchase of the Duffel aluminum recycling and rolling mill near Antwerp in Belgium, which will source primary aluminum from the Dunkirk smelter.

Founded in 1946, Duffel is a leading European producer of premium aluminum rolled products and is described as a pioneer in the European automotive body sheets (ABS) market.

The plant has the capacity to process 250,000 mt/year and currently reuses around 104,000 mt/year of aluminum scrap material, taking Alvance closer to its aim of reaching 1 million mt/year of capacity, GFG said. The acquisition of the plant –- to be renamed Alvance Aluminium Duffel -– marks a significant bolstering and expansion of Alvance's downstream portfolio and its ambition to be a leading supplier of value added, sustainable aluminum products to the automotive sector and other industries, it said.

GFG has been present in Belgium since it acquired the Liege steelworks from ArcelorMittal in July 2019.

Alvance will now start a 100-day review program, working with the Duffel management, trade unions, customers and suppliers, to complete a comprehensive analysis of the businesses to explore investment opportunities and develop detailed plans to boost its competitiveness, extend product range and support sales growth, GFG said. This will explore Duffel's role in both GFG and Alvance's vision to be carbon neutral by 2030, it said.

Duffel will add to GFG's drive to maximize "closed loop" operations across its value chain where waste or scrap products are either recycled by the site that produces them or by another plant within the group - lowering the carbon footprint of the business and extracting more value from the process. Duffel already recycles a large proportion of its own scrap and will expand recycling to include any potential synergies with customers and group sites such as Dunkirk, GFG said.