Norwegian state budget for 2024 and impacts on Elkem

October 9, 2023

CO2 compensation is a government scheme provided to avoid carbon leakage, i.e. where European industry is shut down and moved to countries without CO2 emissions tariffs, causing increased global emissions as well as the loss of green industrial jobs.

This applies to Elkem in Norway as compensation for CO2 costs included in the pricing of the CO2-free renewable power used in Elkem’s Norwegian production of silicon and ferrosilicon. The compensation in Norway has already been reduced to a significantly lower level than what is available in other EU countries.

The Norwegian government has today proposed to raise the deductible quota price floor in the scheme from NOK 200 to NOK 375. If finally approved by the parliament, this will have a negative one-off impact on Elkem’s results in the third quarter 2023 of approximately NOK 170 million, and a negative impact of approximately NOK 220 million per year going forward compared to the 2022 level.

“Today’s announcement from the Norwegian government significantly reduces the attractiveness of future investments in Norway compared to other parts of the world. This is surprising and disappointing in a period where high energy costs have already led to a widespread shutdown of industrial activites across Europe. We now have to evaluate what this means for our current and future investment plans at our production sites in Norway,” says Elkem’s CEO Helge Aasen.

The Norwegian government has previously proposed to enter into a dialogue with the industry about introducing potential requirements in the scheme connected to emission reductions and energy efficiency. Elkem is positive to contribute in such a dialogue, but the government has so far not provided any specific timeline or plan for this process.

“Norway is the leading supplier of silicon metal to the EU, with a market share of close to 40 per cent for a material which is on the EU Commission list of Critical Raw Materials. We experience growing interest for European supplies of such materials. Competitive framework conditions are key for Norway to further develop its role as a leading and trusted supplier of metals and minerals for the green and digital transitions in Europe, and a robust and predictable CO2 compensation scheme is an important prerequisite for continued investments,” says Aasen.

Elkem has six production sites in Norway: Salten, Rana, Thamshavn, Bremanger, Bjølvefossen and Kristiansand. These operations employ around 1,500 people, in addition to contractors and external suppliers, which makes Elkem an important employer in these local communities and regions. Elkem has invested around NOK 10 billion in Norway over the past ten years.

On October, the Norwegian government presented its state budget proposal for 2024. The proposal contains elements potentially affecting Elkem’s activities in Norway.

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