Apr 19 2006
Hydro's management has submitted a recommendation to the company's governing bodies that the magnesium casthouse in Porsgrunn be closed. Fundamental changes in the global market for magnesium alloys form the background for the proposal.
Hydro already announced in February of this year that the magnesium casthouse in Porsgrunn, Norway, was in serious difficulty. Conditions during the first quarter of 2006 have further intensified the gravity of the situation.
"Chinese producers of magnesium alloys are continuing to gain control of the European market by selling at lower prices than we are able to. The magnesium casthouse in Porsgrunn can no longer achieve the prices necessary for profitable operation," says senior vice president Arne Skoland, chairman of the board of Hydro Magnesium Porsgrunn AS.
"A fresh appraisal of the situation, and of possible solutions, has now been undertaken with the understanding and cooperation of the employees’ organizations. Though several measures have been identified, we are still unable to see any way of continuing operations at the Porsgrunn casthouse given the changed market conditions," concludes Skoland.
Hydro’s management will therefore submit a recommendation to the company’s board of directors that the magnesium casthouse in Porsgrunn be closed. The employees will be transferred to Herøya Industrial Park, which will also be responsible for the restructuring process. The plant’s production equipment will be mothballed until further notice.
The approximately 60 employees were informed on Wednesday of the proposal to close the casthouse. A final decision will be taken by Hydro’s corporate assembly.