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UPDATE 1-German Neuss aluminium plant stays open near term

Tuesday, Jul 07, 2009
* German govt to give extra aid of 40 million euros in 2009 * No time scale for how long assessment will last * Board member says industry needs long-term solution HAMBURG, July 6 (Reuters) - Hydro Aluminium, the German unit of Norwegian group Norsk Hydro (NHY.OL), is to keep its large German aluminium plant at Neuss open for the immediate future while a new German state aid plan for metal companies is assessed, a senior Norsk Hydro executive said on Monday. Hydro said in April it would stop production at the loss-making aluminium plant at Neuss in June because of high German electricity costs and weak demand. But the Neuss plant will remain in operation at its current reduced level while the details of a new German government plan to help the non-ferrous metals industry are assessed, Norsk Hydro executive board member Oliver Bell told Reuters. Germany's ruling government coalition has decided to give extra aid of 40 million euros ($55.91 million) in 2009 to help the non-ferrous metal industry overcome the impact of the economic slowdown and high German power costs. The Neuss plant has capacity to produce 230,000 tonnes of primary aluminium annually but is currently producing only about 4,000 tonnes a month or about 50,000 tonnes on an annual basis. "Production will remain at this level until we know more," Bell said. "We need to know what will be the business conditions for Neuss." "The 40 million euros are there but we need to find out the concrete details of what this means. On this basis we will then make a decision." LONG-TERM SOLUTION Bell could not give a time scale for how long the assessment would last but said the longer-term conditions would also have to be developed by Germany's new government after the country's parliamentary elections in September this year. "We do not only need a solution for 2009, we also require a long-term solution to give the long-term planning security that industry needs," he said. Meanwhile, the 40 million euros aid package for 2009 could be paid out to firms in around two months, said Martin Kneer, chief executive of the German metal industry association WVM. The WVM had campaigned for the aid to be paid to the aluminium, zinc and copper industries to help them overcome the hurdle of high German power costs during the economic slowdown, Kneer said. "This is vital to secure the future of several smelters," he told Reuters. Details of how the aid will be paid out were being worked out by Germany's Economy Ministry and the plan would have to be approved by the European Union Commission, the bloc's executive arm, he said. "The money will be paid out in 2009 and we are optimistic that payments will start in around two months," Kneer said. Kneer and Bell were speaking on the sidelines of an event in the "Metals for Climate" campaign to stress the contribution of Germany's metals industry to environmental protection. Kneer said German metals producers faced electricity costs as much as 30 percent higher than neighbouring countries. Its metals sector urgently needed a special electricity tariff as was available in other European countries, Kneer said.

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