Annual Reports

2022 was the most difficult year in Slovalco’s history.

A very positive fact when evaluating this period is that we did not have any work-related accidents with sick leave, and we achieved excellent results in all areas. Despite a large number of non-standard operations, changes in input or technological parameters related to the decisions taken, all employees approached their duties in a highly professional manner, respecting safety rules and technological discipline, and delivered reliable, quality and balanced performance. For its long-term approach and outstanding HSE performance, Slovalco received the Hydro Aluminium Metal Safety Award at the beginning of June 2022.

The new remelting centre was officially opened in mid-June 2022. It is designed for the remelting of process aluminium scrap, i.e. unused process residues from our customers. In addition to increasing production capacity, the investment was also intended to take the aluminium life cycle a step further and promote sustainability and the circular economy. Such recycling saves energy and raw materials, is more energy efficient and environmentally friendly. These are the positive results of the period under review.

On the other hand, by the end of 2021 there were already fluctuations in commodity markets and reduced demand for our products. This forced Slovalco’s shareholders to make difficult decisions. At the end of 2021, the company reduced production volumes to 80% of capacity, and a further curtailment to 60% of capacity was achieved from February 2022. We stopped the production of primary foundry alloys. The start of the war in Ukraine, together with other influences, led to an extreme increase in energy prices in Europe. Slovalco procured electricity for 2022 with the hope that the government’s promised changes to the legislation on the distribution of contributions to the Environmental Fund, adjustments to compensation schemes and their use would be enacted in time to bring Slovak energy-intensive industry – including Slovalco – up to the level of factories of a similar type in developed European countries. If this happened, Slovalco was prepared to negotiate a new long-term power supply contract. Unfortunately, any negotiations on a new contract were prevented by the government’s long-standing unwillingness to adopt the necessary legislative changes. During the year, Slovalco had no choice but to monitor and evaluate the development of external factors over which we had no control. With the price of electricity remaining high, the likelihood of a new long-term power supply contract was significantly reduced. Also for this reason, in the second half of August the Board of Directors took the final decision not to increase the losses any further and to close down primary aluminium production. This also entails a restructuring of the company and the implementation of changed processes, including the optimisation of the number of employees. The complete closure of primary aluminium production after 70 years of production took place at the beginning of January 2023 with the shutdown of the last of the 226 pots. At the same time, Slovalco is focusing on increasing remelting capacity and optimising new processes.

I believe that in the future the right conditions will be created for the resumption of primary aluminium production and a decision can be taken to restart production. In the meantime, we will use our long experience and rely on a team that has achieved excellent results to maximise the capabilities of the existing remelting technology while seeking new market applications.

Milan Veselý

Chief Executive Officer