(Bloomberg) -- Just weeks after the collapse of Swedish battery maker Northvolt AB, its founder Vargas Holding is turning its attention to another energy-intensive industry that needs cleaning up.
Partnering with Rio Tinto Plc, Fortum Oyj and Mitsubishi Corp., Vargas plans to build a low-carbon primary aluminum plant in Finland that could be up and running late this decade. The project — named Arctial — would add another piece to the Swedish investment firm’s portfolio that also includes green steel, textile recycling and heat pumps.
“We are talking a big industrial investment,” Torbjorn Sternsjo, the manager of Arctial, said in an interview on Friday.
Arctial will start a feasibility study early next year, and a final investment decision could be made in 2026 or 2027 for a plant that may produce as much as 500,000 tons of aluminum per year.
“We have a clear plan where we want to go and with owners that have a perfect combination of competences,” Sternsjo said.
With consumers in the region now relying heavily on imports, Arctial and its partners are eyeing an opportunity to tap Finland’s cheap sources of green energy and Rio’s technical expertise to build a smelter with a lower carbon footprint than traditional processes. It would also be the first of its kind in more than 30 years, with Rio saying it would aim to become an off-taker in the partnership.
Aluminum is one of the most energy-intensive metals to make, and European production was hammered as power prices spiked in the wake of Russia’s invasion of Ukraine. There’s been a modest rebound as energy prices have receded in recent months, but there are ongoing worries that output at Europe’s ageing fleet of smelters will never fully recover.
Fortum, Finland’s largest power producer, will help with electricity and hedging strategies.
Vargas says two potential locations have been identified, in Kokkola and Kronoby on the Finnish west coast. Both have good access to fossil-free power, as well as a “strong industrial heritage in metals,” according to the investor’s website.
“Geopolitical and regulatory tailwinds further underscore the need for European aluminum production. This makes the establishment of a European greenfield aluminum operation attractive,” Vargas said.
The impact investor’s biggest bet so far, Northvolt, filed for Chapter 11 bankruptcy protection in the US last month after an aggressive expansion plan unraveled leaving it with just one week’s cash in its accounts. The company had received about $10 billion in debt, equity and public grants as it aimed to become Europe’s homegrown supplier of EV batteries.
--With assistance from Mark Burton.
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