Heidelberg Materials may shut plants if power prices stay high

© Reuters.

By Christoph Steitz

HEIDELBERG, Germany (Reuters) -Heidelberg Materials may have to shut down plants in Germany due to soaring energy costs, with the bill for gas and power for the world's No. 2 cement maker seen reaching more than 3 billion euros ($2.9 billion) this year, it said.

"If power prices won't come down sustainably, we would have to take individual plants in Germany completely off the grid. That's what we have prepared for," Chief Executive Dominik von Achten told reporters at the group's headquarters on Tuesday.

The company -- formerly known as HeidelbergCement (ETR:HEIG) -- is shifting production to days when power prices are lower, including during the weekend, von Achten said, adding that this was a testament to workers' flexibility.

Moving production days to the weekend requires staff at some of Heidelberg's European cement plants not to come in during the working week, von Achten said. He said this required ongoing discussions with labour unions.

In the wake of exploding power prices, Heidelberg Materials expects its energy bill to climb by half, or around 1 billion euros in 2022, up from 2.1 billion last year, Chief Financial Officer Rene Aldach said.

To soften the blow, the group called for a cap on gas and power prices to protect jobs and production in Europe's largest economy, which has been hit badly by soaring gas prices as it depended on Russia for more than half its gas.

Aldach said the company was hedged to a certain level against high power prices, and said those hedges were protecting the group against the full force of prices of 300 euros-500 euros per megawatt hour during the next three quarters.

Asked about fuel switches, Aldach said some of Heidelberg Materials plants were already able to run on alternative fuels, which may include wood pellets, at 80-90%.

($1 = 1.0435 euros)