Norwegian aluminium producer Norsk Hydro ASA said yesterday that it may be forced to close its jointly-owned aluminium plant in Slovakia if the country’s government does not provide it assistance via its carbon-compensation system.

The plant, which is 55.3 percent owned by Norsk Hydro and 44.7 percent owned by Penta Investments, is currently operating at 60 percent of its 175 thousand metric tons per annum nameplate capacity.

Norsk Hydro spokesman Halvor Molland told Reuters this week that the plant is currently still operating thanks to its contract with power company Slovalco.

“When Slovalco’s power contract expires at the end of the year, keeping aluminium production going at Slovalco will become much more challenging.”

“Many countries, including Germany, Norway and Netherlands have chosen to support aluminium producers with carbon compensation,” he continued. “Slovakia hasn’t.”

Molland went on to say that the plant meets half of Slovakia’s aluminium demand and provides 500 jobs for locals.

Hydro points out that other European countries would typically provide about US$73 million per year in CO2 compensation for a plant the size of the operations in Slovakia. The EU’s CO2 compensation system allows national governments to subsidize industries with high power requirements so that they may more easily meet the fees required by the Emissions Trading System (ETS).

For its part, the Slovakian government said through its Environment Ministry that it will wait until the system is fully implemented.

“The new bill on (carbon) allowances trading is still in the legislative process.”

“The Environment Ministry is aware of Slovalco’s importance for the region, the ministry and the government have been helping the company,” the ministry representative continued. “Slovalco received more than 21 million euros in 2016-2020 as a compensation – 51.6% of the overall compensation paid.”