Slovalco Restarts On Slovak Power Aid

The first electrolysis pots at Slovalco's aluminium plant in Žiar nad Hronom were switched back on this week, three years after electricity prices forced primary production to stop. For Malta, this is not a distant Slovak industrial story. It shows the bargain now taking shape across the EU: if Europe wants to keep energy-hungry industry onshore, governments are being pushed into cheap power, relief from carbon costs, and support with no clear expiry date.

75,000 Tonnes, Not 175,000

Slovalco is bringing back 75,000 tonnes of annual production from a plant with total capacity of roughly 175,000 tonnes. The restart comes with investment of at least €100 million. The remaining 100,000 tonnes depend on power contracts that have not yet been secured and on conditions after 2030.

Prime Minister Robert Fico presented the restart as restoring up to 17% of European primary aluminium production. That number uses Slovalco's full capacity, not the 75,000 tonnes actually committed. It also measures the plant against EU-only primary output, which has fallen to roughly 950,000 tonnes a year as smelters across the bloc have closed.

Wider European production stood at about 3.6 million tonnes in the first half of 2026. On either measure, the first phase of the Slovak restart is much smaller than the political framing suggests.

Cheap Power Is Becoming Industrial Policy

Primary aluminium means new metal made from ore through electrolysis, rather than recycled scrap. It consumes huge amounts of electricity: around 14 megawatt-hours per tonne. Power usually accounts for 30–40% of production cost. That is why smelters are among the first plants to shut when prices rise and among the hardest to reopen without state help.

Slovalco's help has two parts. The first is a long-term supply deal with Vodohospodárska výstavba, Slovakia's state-owned hydropower company, for roughly 100 MW of steady round-the-clock electricity. Smelters cannot cheaply switch production on and off, so they need baseload power at a price well below the market. The actual price has not been made public; the state utility classified the contract volumes and pricing as trade secrets.

The second part is a redesigned compensation scheme for carbon-related electricity costs. Under the EU's Emissions Trading System, power generators pay for carbon permits and pass that cost into wholesale electricity prices. Large industrial users then pay more for power even when their own production does not add emissions at that point.

The European Commission approved Slovakia's revamped scheme in July, almost tripling the programme budget from €250 million to €710 million. It also raised the share of eligible costs the state can cover from 75% to 80%. Slovalco also received relief from the nuclear-fund levy and other charges (Teraz). Slovak media put the annual cost of industrial relief from the Environment Fund at about €75 million.

Slovakia is part of a wider EU pattern. The Commission cleared similar carbon-cost schemes for Czechia, France, the Netherlands, Austria and Spain in the same period (Brussels Times). Spain's Alcoa San Cibraó restarted all 512 pots by April 2026, preserving more than 1,000 jobs, but its long-term future still depends on wind farms that have not yet been built and €72 million in expected CO₂ compensation.

Germany's federal economics ministry argues that cheaper industrial power keeps suppliers, factories and skilled work in the country. Critics say the support is still too small to change investment decisions. ARD reported that one scheme would cut an example industrial power price from 18 to 17.6 cents per kilowatt-hour.

Who Pays, Who Gains

The gains are concentrated. Slovalco's majority owner, Norwegian aluminium group Hydro with 55.3%, and co-owner Penta Investments get a producing asset back. More than 200 workers in Žiar nad Hronom keep their jobs. Downstream manufacturers get a European source of primary metal instead of relying on imports that cover 70–80% of EU demand.

The costs are spread across taxpayers and climate budgets. Carbon-cost compensation diverts ETS auction revenue that could otherwise fund green programmes or reduce deficits. The state utility is also locking in electricity on undisclosed terms, giving up whatever it might earn by selling that power on the open market.

For a country like Malta, where EU energy and state-aid decisions quickly become domestic economic questions, the Slovak case is worth watching. Slovalco shows that restarting heavy industry is possible when the state keeps underwriting electricity costs. It also shows the price of that choice: support becomes a recurring commitment, not a one-off rescue. Even the owners accept that logic. They will not commit to the second half of the plant without another round of guarantees.