Evangelos Mytilineos’ Euroactiv article - Tackling Europe’s Industrial Competitiveness Challenge

The new European Commission has just been approved in Brussels and it’s clear that at the top of its agenda is addressing competitiveness challenges in the European economy. There are a number of Commissioners who will be tasked with dealing with this issue, notably EVP Teresa Ribera and EVP Stéphane Séjourné, who will be supported by Commissioners Jorgensen and Roswall in Energy and Competitive Circular Economy respectively. So, what do we expect of them in their first 100 days, and in the coming year?

The non-ferrous metals industry is the backbone of Europe’s energy transition, the digital transition and increasingly importantly for our defense. As Mr. Draghi pointed out, we will need to have more strategic autonomy in a world which is increasingly unstable and where war is on our European borders. Our industry is the engine that can drive our increased resilience, but we will need support to do it.

As the CEO of a major European non-ferrous metals processing company, as well as the President of Eurometaux (the European non-ferrous metals association), I’m expecting significant action to be taken by the new Commission to get our sector back up and running before it’s too late. Today, 15 Aluminium, Silicon and Zinc processing plants lie shuttered across Europe. This is the opposite of what we need, and the time to revive them is running short.

We must urgently address the soaring energy costs that are crippling our industries. Ursula von der Leyen has listed economic security as one of her key pillars of the future Clean Industrial Deal. We cannot have economic security when the price of electricity and gas is four times than that paid by our competitors. Meanwhile, third country subsidies have worsened the picture. It’s now three times more capital intensive to build a new battery materials refinery in Europe compared with our rivals, with operating costs up to 50% higher.

We need decisive action to lower energy costs and create a level playing field. Failure to do so will result in further loss of critical industries and weaken Europe's strategic autonomy, with ripple effects on entire value chains. It's time to act before it's too late. These are three actions that can and must be taken to address the energy price crisis:

1. We must remove barriers to renewables power purchase agreements (PPAs) and their uptake by electricity-intensive industries, by allowing targeted support measures for matching the variable generation profiles of solar and wind with the baseload consumption profile of metals production. This is a clear and joint ask by the power sector and industry, reflected in the recent recommendations from the Antwerp Dialogue on Industrial Electrification & Competitiveness. Promoting ‘Green Pooling’ schemes, like the one put forward by the Greek Government, also featuring in the Draghi Report, will undoubtedly form part of the solution.
2. We must preserve and strengthen the Emissions Trading System’s indirect cost compensation scheme beyond 2030, to provide investment certainty by partially offsetting the ETS’s impact on electricity costs for industry, even when consuming decarbonised electricity.
3. We must Cap taxes, levies and all other regulatory power costs for energy-intensive consumers, and make sure they cumulatively do not exceed a percentage of the industry’s Gross Value Added.

Addressing these issues would be a good way to start giving economic security to European non-ferrous metals producers and the communities our facilities support.

Energy prices are a top concern, but we also see the urgent need to get the Critical Raw Materials Act (CRMA) implemented and delivering. Eurometaux estimates that our sector need 10 new mines, 15 new processing facilities and 15 new recycling plants in Europe by 2030 if we are to meet the goals of the CRMA. Obviously, we also need to re-open the 15 closed or curtailed plants too.

This also requires finance, and we need to have simplified and accessible funding mechanisms to support European companies. I believe we need to:

1. Introduce Raw Materials State Aid guidelines focused on OPEX as well as CAPEX, including scaling-up critical raw material production and facilitating consumption of decarbonised electricity, partly building on the dedicated chapter of the Temporary Crisis and Transition Framework.
2. Deliver a Sovereignty Fund for manufacturing, including a strong raw materials focus, capable of rivalling our global competitors.
3. Set up a Raw Materials Bank, inspired by the Hydrogen Bank, which provides time-limited output-based support, applicable both to operating and capital costs of strategic projects.

These actions would put some flesh on the CRMA bones, which today offers but a pat on the shoulder to support its implementation!

We also need to reduce the build-up of new regulatory costs in Europe. The next European Commission needs to address where its tsunami of adopted policies will impose unwarranted new costs on its industries and take common-sense corrective measures. I hope that the omnibus package will start this process and reduce the reporting burden on EU companies, which is starting to become overwhelming and take resources away from actually working to improve company performance.

At the start of this political cycle, I stay hopeful that real change is ahead. The Letta and Draghi reports have refocused the European debate onto the foundations of industrial competitiveness, taking us forward from the Critical Raw Materials and Net Zero Industry Acts. The much-lauded Clean Industrial Deal is under development, the responsibility of EVP Séjourné, the content of it has not yet been unveiled, but is due within the next 100 days. This cannot be a communication but a concrete action plan, with pressing milestones and on-the-ground KPIs.

The Clean Industrial Deal must be a catalyst for European industrial competitiveness and focus on practical and immediate measures to bring down production costs and streamline regulations, making Europe a more attractive destination for businesses. Let’s capture the momentum and drive this change, anything less would be a betrayal of the companies and workers who, through their work, strive to deliver strategic autonomy and economic security for Europeans every day.

Evangelos Mytilineos is the Chairman & CEO of METLEN Energy and Metals and the Eurometaux President. 

Source: Tackling Europe’s Industrial Competitiveness Challenge - Euractiv