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Sanctions are working.  Looks like Russia is extremely desperate and losing worse than expected.  Sanctions aren’t going to be lifted until Russia is out of Ukraine, and so this is a useless gesture on Russia’s part.  After everybody finds alternatives, they won’t be going back to Russia in a hurry, because they know that as long as Putin is in power, he will keep on trying to take over other countries or their assets (see his threats towards Moldova and Georgia).  Once Russia is out of Ukraine, Ukraine will be able to sell oil and gas to Europe (one of Putin’s objectives was to steal their oil and gas, one his proxies openly talked about on Russian state media).  When Putin tells you he intends to fuck everybody over, one should listen to him.

 

Edited by atomheartbevo
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I would toss in the Nordic/Baltic countries are doing a lot for Ukraine, plus Australia, Japan, etc.  France will be pissing in the wind if they want territory given up. And we are just now ramping up our arms production (and a lot of logistics/warehouse folks are probably quite happy to be sending all kinds of older weapons off to Ukraine, like 30 year-old HARMs made for F-14s that we haven't flown in 15 years.

We really need to figure out how to add Australia and New Zealand to NATO, but that's for another thread.

The energy situation in Europe will be a lot different 6-12 months from now, once more and more alternative sources come online, even if a few countries break with the rest of the EU and go back to Russia for energy.

Now the food situation in Africa and Asia...

Edited by atomheartbevo
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1 hour ago, atomheartbevo said:

 

Now the food situation in Africa and Asia...

Add in Korea for NATO inclusion. We can call it the Non-Asshole Treaty Organization. 

And yeah, that is what we are watching. 

Buddy called me today from Kenya. Masai are talking about selling their cows. Um, they don't usually do that. 

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8 hours ago, atomheartbevo said:

The energy situation in Europe will be a lot different 6-12 months from now, once more and more alternative sources come online, even if a few countries break with the rest of the EU and go back to Russia for energy.

 

Agreed. I would put it more at 2 years, but a lot of LNG capacity being built out that will replace energy needs. Russia has probably screwed themselves long term. Europe still has to get through this winter.


Financially, I’ve seen back of the envelope math cited that puts the total bailout number for EU states at $500B. They can do that so it will just be matter of secondary effects of the money printing. 
 

Now this stuff I don’t fully understand. Derivatives can fuck it all up. 
 

 

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11 hours ago, atomheartbevo said:

 

Also, spent yesterday afternoon having drinks with an Asian affairs expert (used to work with Biden on such matters in the Senate).  He was emphasizing this very point -- by 2030, China is in a demographic crisis.  They'll have 350 million retirees (more than the entire US population), with no real built-in safety net to care for them.  And it only gets worse going forward for China.  Further economic expansion is going to be quite difficult for them.

As for China and Taiwan, he's not worried at all (with the caveat that continued US "provocation" is not helpful -- probably doesn't do lasting damage, but his advice on the Taiwan issue has been, for decades, "we should just shut the fuck up and keep doing what we're doing.")  China knows that they can't conquer Taiwan, and they know that with the current generation, there's no chance of a peaceful re-joining.  They are playing the long game, and trying to lay groundwork for a future generation to be more amenable to reunification.  

Truthfully, he's been bearish on China as a threat for a good while.  They are an adversary, but his take is that if we simply compete with them as a rival, and don't actively try to trip them/sabotage them, we won't have conflict, and we're actually much better situated to be a dominant global force than they are.  And "friendshoring" (sending more of our manufacturing to friendly regimes in Asia -- Vietnam, Thailand, even Japan again) is already happening.  US and allied investment in additional Chinese manufacturing is drying up, and those new projects are being placed in more friendly regimes.  He thinks China is running out of runway to aggressively expand economically.

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4 hours ago, Brisketexan said:

Also, spent yesterday afternoon having drinks with an Asian affairs expert (used to work with Biden on such matters in the Senate).  He was emphasizing this very point -- by 2030, China is in a demographic crisis.  They'll have 350 million retirees (more than the entire US population), with no real built-in safety net to care for them.  And it only gets worse going forward for China.  Further economic expansion is going to be quite difficult for them.

As for China and Taiwan, he's not worried at all (with the caveat that continued US "provocation" is not helpful -- probably doesn't do lasting damage, but his advice on the Taiwan issue has been, for decades, "we should just shut the fuck up and keep doing what we're doing.")  China knows that they can't conquer Taiwan, and they know that with the current generation, there's no chance of a peaceful re-joining.  They are playing the long game, and trying to lay groundwork for a future generation to be more amenable to reunification.  

Truthfully, he's been bearish on China as a threat for a good while.  They are an adversary, but his take is that if we simply compete with them as a rival, and don't actively try to trip them/sabotage them, we won't have conflict, and we're actually much better situated to be a dominant global force than they are.  And "friendshoring" (sending more of our manufacturing to friendly regimes in Asia -- Vietnam, Thailand, even Japan again) is already happening.  US and allied investment in additional Chinese manufacturing is drying up, and those new projects are being placed in more friendly regimes.  He thinks China is running out of runway to aggressively expand economically.

I will preface this that I am wildly ignorant of how things are in Asia...even Europe. That being said, considering so much of that country is poor, isn't the answer basically "Kids will take care of parents however that can/want" and that's not a problem of the government? It's not like they're going to vote the regime out of office. 

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26 minutes ago, SydneyCarton said:

I will preface this that I am wildly ignorant of how things are in Asia...even Europe. That being said, considering so much of that country is poor, isn't the answer basically "Kids will take care of parents however that can/want" and that's not a problem of the government? It's not like they're going to vote the regime out of office. 

Well, he spoke to that as well.  The population has heavily urbanized in recent decades.  Those kids have now moved to Beijing and Shanghai.  They live in a nice apartment.  They've gotten used to having money, nice things, maybe even a nice vacation every now and then.  So, the bit about "so much of the country is poor" doesn't apply to people under the age of 40 like it used to.  And mom and dad hopping a bus from the village, and coming to live with them, living on their nickel, is going to put a serious crimp in that.  And it's not just one mom and dad.....your wife's mom and dad are coming, too.  The "one child" policy means that there are a whole lot of households that are going to have to care for 4 grandparents in retirement.

How happy would YOUR wife be if all 4 of your parents came to live with you?  How miserable would she make you?  And wouldn't you want to kick the shit out of whoever condemned you to that existence?  History has shown us that sending starving peasants even further down the hole doesn't really turn the peasants into an angry mob deposing the government.  But....make it so the upper middle class can't afford their favorite brand of yogurt or somesuch?  There's hell to pay.

Restless peasants don't frighten Xi.  Restless middle class residents of Beijing does.

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Well, he spoke to that as well.  The population has heavily urbanized in recent decades.  Those kids have now moved to Beijing and Shanghai.  They live in a nice apartment.  They've gotten used to having money, nice things, maybe even a nice vacation every now and then.  So, the bit about "so much of the country is poor" doesn't apply to people under the age of 40 like it used to.  And mom and dad hopping a bus from the village, and coming to live with them, living on their nickel, is going to put a serious crimp in that.  And it's not just one mom and dad.....your wife's mom and dad are coming, too.  The "one child" policy means that there are a whole lot of households that are going to have to care for 4 grandparents in retirement.
How happy would YOUR wife be if all 4 of your parents came to live with you?  How miserable would she make you?  And wouldn't you want to kick the shit out of whoever condemned you to that existence?  History has shown us that sending starving peasants even further down the hole doesn't really turn the peasants into an angry mob deposing the government.  But....make it so the upper middle class can't afford their favorite brand of yogurt or somesuch?  There's hell to pay.
Restless peasants don't frighten Xi.  Restless middle class residents of Beijing does.
Well said, fucker. But dang it if your not often correct.

This thread is like a slow drip IV of depression, or I suppose if your proactive and smart- an investment guide.
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4 hours ago, Born to Run said:

This thread is like a slow drip IV of depression, or I suppose if your proactive and smart- an investment guide.

It's slow because countries are typically slow to pivot when having to change their policies, etc.  Like the announcement of Germany keeping some nuclear plants open into next year.  They debated this for months.

 

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16 hours ago, Brisketexan said:

Well, he spoke to that as well.  The population has heavily urbanized in recent decades.  Those kids have now moved to Beijing and Shanghai.  They live in a nice apartment.  They've gotten used to having money, nice things, maybe even a nice vacation every now and then.  So, the bit about "so much of the country is poor" doesn't apply to people under the age of 40 like it used to.  And mom and dad hopping a bus from the village, and coming to live with them, living on their nickel, is going to put a serious crimp in that.  And it's not just one mom and dad.....your wife's mom and dad are coming, too.  The "one child" policy means that there are a whole lot of households that are going to have to care for 4 grandparents in retirement.

How happy would YOUR wife be if all 4 of your parents came to live with you?  How miserable would she make you?  And wouldn't you want to kick the shit out of whoever condemned you to that existence?  History has shown us that sending starving peasants even further down the hole doesn't really turn the peasants into an angry mob deposing the government.  But....make it so the upper middle class can't afford their favorite brand of yogurt or somesuch?  There's hell to pay.

Restless peasants don't frighten Xi.  Restless middle class residents of Beijing does.

During the pandemic they welded people's doors shut.  Hundreds of millions herded like cattle and starved.  Even billionaires in China "disappear".  Basic human "rights" in China are subject to the whims of the state.  The pandemic only strengthened this authoritarianism, especially on the digital/tech side.  The problem is, many in China see their economic and global success as a result from their authoritarian system.  

Quote

Many Chinese believe that the country’s recent economic achievements have actually come about because of, not despite, China’s authoritarian form of government..... Its aggressive handling of Covid-19—in sharp contrast to that of many Western countries with higher death rates and later, less-stringent lockdowns—has, if anything, reinforced that view.

The citizens are such tractable sheep that while any population can be pushed into revolution, the Chinese are unique in the modern, industrialized landscape.

Quote

China uses its particular authoritarian model—and its presumed legitimacy—to build trust with its population in ways that would be considered highly intrusive in a liberal democracy. The city of Rongcheng, for example, uses big data (available to the government through surveillance and other data-capturing infrastructure) to give people individualized “social credit scores.” These are used to reward or punish citizens according to their political and financial virtues or vices.

What the west gets wrong about China

This HBR focusses on economic factors & investment, but also hits the nail on the head about the mindset of the people and their support on the authoritarian regime and how controlled they really are.  

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6 hours ago, Humble Beast said:

Looks like they’re going to go with price caps and rationing to deal with resulting shortages. Bold strategy, Cotton. 
 

 

Hopefully this flattening of the curve works better than the last one. 

It's really incredible how you're just completely ignoring that this is the result of putin's economic war against Europe to punish them for assisting Ukraine. Also surprised that babyaga would rep humbleGRUvibes fist pumping putin's effectiveness in causing pain to Ukraine's lifeline, considering he's been pretty pro-Ukraine. 

¯⁠\⁠_⁠(⁠ツ⁠)⁠_⁠/⁠¯

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6 minutes ago, Etexhorn13 said:

I have family in Chile who have been there a long time, and they were very happy with this outcome. Most considered the new constitution too radical.

Also, a bit of an uprising in Austin.

It started in 2021: https://cbsaustin.com/news/local/two-detained-at-austin-airport-following-brawl-over-reported-seat-reclining-dispute

Now:

 
 
 
 
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Saw a few analysts mentioning that parts of Africa could be in a full-blown crisis by December if Russia doesn’t stop fucking around with Ukraine and it’ll get exponentially worse if Russia doesn’t back down before the spring.  Thankfully, Ukraine is kicking a lot of ass, and Europe is ready to get in and help Ukraine rebuild after Russia is booted out.

But November through the spring are still going to be dicey as hell.

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2 hours ago, atomheartbevo said:

Saw a few analysts mentioning that parts of Africa could be in a full-blown crisis by December if Russia doesn’t stop fucking around with Ukraine and it’ll get exponentially worse if Russia doesn’t back down before the spring.  Thankfully, Ukraine is kicking a lot of ass, and Europe is ready to get in and help Ukraine rebuild after Russia is booted out.

But November through the spring are still going to be dicey as hell.

I've never looked into it, but why can't Africa grow it's own crops? I know east Africa has experienced significant drought in the past decade, but the eastern part seems to be a viable place to grow crops. Their farms probably aren't industrialized like they are in the US (and Ukraine?). But seems like this is a perpetual issue with thousands of deaths every year due to hunger.

The Africans will try to go to Europe, but that's obviously not the solution. Will they be more angry at Europe for turning them away? Or will they blame Russia for their situation?

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On 9/7/2022 at 7:54 AM, Humble Beast said:

Looks like they’re going to go with price caps and rationing to deal with resulting shortages. Bold strategy, Cotton. 
 

 

Hopefully this flattening of the curve works better than the last one. 

Our (well maybe not your) grandparents and great grandparents gladly did this and more to get us through WW 2. 

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29 minutes ago, Superhero said:

I've never looked into it, but why can't Africa grow it's own crops? I know east Africa has experienced significant drought in the past decade, but the eastern part seems to be a viable place to grow crops. Their farms probably aren't industrialized like they are in the US (and Ukraine?). But seems like this is a perpetual issue with thousands of deaths every year due to hunger.

The Africans will try to go to Europe, but that's obviously not the solution. Will they be more angry at Europe for turning them away? Or will they blame Russia for their situation?

This is a very loaded question with lots of facets, but the best answer is lack of knowledge, tribalism warfare, poor infrastructure, and limited growing regions combined with population growth that has outstripped their own small-scale food production and have therefore been dependent on outside help for generations.

 

Its a mess and lots of people much smarter than me have failed at trying to fins a legit solution.

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1 minute ago, Laxtonto said:

This is a very loaded question with lots of facets, but the best answer is lack of knowledge, tribalism warfare, poor infrastructure, and limited growing regions combined with population growth that has outstripped their own small-scale food production and have therefore been dependent on outside help for generations.

 

Its a mess and lots of people much smarter than me have failed at trying to fins a legit solution.

Well that and having almost the entirety of Africa colonized and destroying all of the social and civil structure basically set them back a few hundred years. Decolonization was about as successful as reconstruction, and that legacy is a big part of why there's so little ability for a government to last

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This is a very loaded question with lots of facets, but the best answer is lack of knowledge, tribalism warfare, poor infrastructure, and limited growing regions combined with population growth that has outstripped their own small-scale food production and have therefore been dependent on outside help for generations.
 
Its a mess and lots of people much smarter than me have failed at trying to fins a legit solution.

Lack of infrastructure is huge on this point. Can’t get equipment and fertilizer to remote areas, and even if those things were there, not enough people know how to use them and couldn’t get bulk amounts of food to market anyway.

Remember the stories we used to read about barns full of potatoes rotting in Russia because they didn’t have adequate roads to get them to the cities? Similar stuff.
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1 hour ago, Sawbonz said:

Our (well maybe not your) grandparents and great grandparents gladly did this and more to get us through WW 2. 

One of my grandpas earned a Silver Star in WW2.
 

Comparing Russia invading Ukraine to WW2 is quite a stretch imo. Evidently they’re getting pushed back quite a bit. It appears that they’re a weak and inept military force. So I just don’t get that. 
 

There’s also the distinction that European sacrifices in WW2 were voluntary and needed for a total war effort. These are being made because of an accumulation of years of poor energy policy that was weaponized and then leveraged by an authoritarian. 
 

Fortunately it looks like at least the Uk gets that there’s an overall supply problem even if they’re pursuing price caps initially. 
 

 

Also, China is building out large amounts of fossil fuel and nuclear plants alongside green projects. Their goal is to reach 25% non fossil fuels for their energy consumption by 2030.
 

Considering they control almost all of the supply chains for renewable energy it’s surprising that they’re not just building it all out for themselves. I’ve been told it’s definitely the most cost effective source of energy out there. It’s weird that they wouldn’t press such a massive strategic advantage if that’s the case.  

 

 

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1 hour ago, Captainant said:

Well that and having almost the entirety of Africa colonized and destroying all of the social and civil structure basically set them back a few hundred years. Decolonization was about as successful as reconstruction, and that legacy is a big part of why there's so little ability for a government to last

Got it. Basically what France did to Haiti. Even thought Haiti and DR are on the same island, DR comparatively flourished because Spain treated it as a colony instead of just stripping it of its resources. 

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Spoiler



European power producers are facing margin calls that could total €1tn but will be in a strong position to repay state-backed loans if governments help them through the liquidity squeeze, according to energy experts at consultants Baringa. The soaring price of power this year has pushed up the margin requirements on electricity generators that hedge their sales in the futures market to unprecedented levels, leading to widespread calls for government intervention to prevent the European market from collapsing. Nick Tallantyre, global head of energy and commodities trading at Baringa, said governments should feel confident to provide market participants with the additional liquidity they need.

“A lot of the strain that we’re seeing are companies that need financing for trading but aren’t facing insolvency because actually, if they’re on the producing side of the market, they’re benefiting from high prices in the physical market,” he said. Once the power is delivered and the hedges are unwound, most companies will have ample cash to repay any state-backed credit, he added. “It’s a short-term cash pinch and governments should issue loans but they should feel confident they will be repaid.” EU ministers will meet on Friday to discuss potential bloc-wide measures. The UK on Thursday said the Treasury and the Bank of England would put in place an Energy Markets Finance Scheme to provide £40bn in short-term liquidity to wholesale energy producers, while Denmark said it planned to provide $13.5bn of loan guarantees to utilities. Electricity generators like to reduce the financial risk of their power sales to households and businesses by taking short positions in futures markets before selling the physical electricity. Such trades require the generator to post additional collateral — or margin — to the exchange’s clearing house if the value of the underlying asset rises, resulting in soaring margin requirements as power prices have soared. Recommended ExplainerEnergy crisis Why are Europe’s power producers running out of cash? Estimating the total size of the margin requirements across the entire European gas and power market was challenging but was highly likely to be in the order of €1tn, Tallantyre said. Europe consumes almost 3,000 terawatt hours of power a year but not all electricity is sold through wholesale markets as integrated companies can sell straight to consumers. The annual volume of gas and power traded, however, is about five times total demand, according to Baringa. Roughly 70 per cent of those 15,000TWh are traded in so-called over-the-counter transactions between counterparties that make their own credit arrangements, many of which will not be collateralised. The rest, about 5,000TWh, is traded on exchanges, which require the parties on each side of the transaction to make margin payments. In total, “€1tn is probably not a foolish estimate,” Tallantyre said. Countries where a higher proportion of power is traded on exchanges, such as Germany, were likely to be more affected, Tallantyre added. The EEX in Leipzig is Europe’s most liquid power market and the main trading venue for Germany and central Europe. Companies with greater vertical integration were likely to be better protected, he said, as electricity generators with retail arms have a direct route to market, meaning less need to sell power to a distributor and then hedge that sale.

 

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Spoiler

European industry thrived for decades on a steady supply of cheap Russian gas, which flowed uninterrupted throughout the Cold War and other times of tension between Moscow and the West.

Since invading Ukraine, Russian President Vladimir Putin has weaponized the country’s vast stores of energy to undermine support for Kyiv. He turned off the taps to the biggest natural-gas pipeline, Nord Stream, completely this month.

The impact has pushed Europe to the brink of recession and threatens to inflict lasting harm on its manufacturing businesses. Unlike the U.S., Europe leaned on manufacturing and heavy industry to keep its economy chugging in recent decades. A bigger chunk of its economy comes from the likes of steelmakers, chemicals producers and car makers.

Europe’s energy crisis has left few businesses untouched, from steel and aluminum to cars, glass, ceramics, sugar and toilet-paper makers. Some industries, such as the energy-intensive metals sector, are shutting factories that analysts and executives say might never reopen, imperiling thousands of jobs.

The question is whether the current pain is temporary, or marks the start of a new era of deindustrialization in Europe. The bloc has scoured the world for alternative gas supplies, striking deals to buy gas from the U.S., Qatar and elsewhere. But the continent might never again have access to the cheap Russian gas that helped it compete with the resource-rich U.S. and offset high labor costs, rigid employment rules and stringent environmental regulations.

In the city of Žiar nad Hronom, Slovakia, built around a 70-year-old aluminum factory that supplies car-part makers across the continent, some fear for their financial future. “This is probably the end of metal production in Europe,” said Milan Veselý, who has worked at Slovalco, majority owned by Norway’s Norsk Hydro ASA, all his adult life, following in his parents’ footsteps.

Slovalco is among the companies hit by volatility in electricity prices across Europe caused by low Russian supplies of power-generating gas. For years the factory was by far the biggest buyer of power in Slovakia, consuming 9% of the country’s electricity, most of it from nuclear energy. Before energy prices started rising last year, Slovalco paid about €45 (about $45) for each megawatt-hour of power. In 2022 so far it has paid €75, in a deal locked in last year. In late August, prices hit €1,000 across Europe.

Slovalco didn’t renew its power contract for 2023, which would have cost €2.5 billion euros at the recent peak in power markets. Mr. Veselý, the plant’s manager, is winding down primary-metals production, leaving a small recycling operation. He is also dismissing 300 of 450 workers. “The volatility of the price of electricity these days—it’s crazy,” he said. “This is the way we are actually killing industry.”

Factory curtailments and closures have saved fuel in Europe’s quest to reduce demand. Along with the hunt for non-Russian supplies, that’s enabled the European Union to sock away enough gas to fill over 80% of its storage capacity, probably enough to get to spring without government-enforced quotas even if Mr. Putin cuts supplies to zero, analysts say.

The judgment most governments have made is that slowing and shutting factories now is preferable to cutting off power to hospitals and schools over winter. Europe consumed 10% less gas than the average for the time of year in August, according to commodities-data firm ICIS. The EU is aiming for demand reductions of 15%.

The factory closures come at a ruinous cost. Companies in energy-intensive industries say they face going bust this winter without government support. Complex supply chains in sectors such as the auto and food industries are getting gummed up, adding to inflationary pressures just as pandemic snarl-ups show signs of easing.

Norwegian fertilizer giant Yara InternationalASA, which uses gas as an ingredient, has cut crop-boosting ammonia production by 65% across its European factories.

 

We think about things we wouldn’t dare to think about a year ago,” said Michael Schlaug, general director of Yara’s Sluiskil facility in the Netherlands, which stopped the second of three ammonia plants in late August. Engineers are rejigging machinery to accommodate imported ammonia with higher water content as the facility turns to shipments from the U.S., Trinidad and elsewhere to replace products it previously made.

Dutch fertilizer company OCI NV is importing more ammonia through Rotterdam. It plans to triple its capacity at the port by next year and is expanding its Beaumont, Texas, facility to produce ammonia that can be transported to Europe and Asia.

“It really tips the scales in the U.S.’s favor,” Chief Executive Ahmed El-Hoshy said of energy costs.

 

A reduction of Europe’s industrial capacity would deepen the reliance on materials and parts made overseas at a time when governments are striving to bring supply chains for renewable energy, electric vehicles and military arms closer to home.

 

Metals producers, which require significant power to break down and form chemical bonds, are at the front of the crisis. Electricity prices have more than doubled this year, propelled by high gas prices, trouble in France’s nuclear fleet of power plants and low hydropower generation.

ArcelorMittal SA, one of the world’s largest steelmakers, will close a blast furnace in Bremen and a so-called direct reduction plant in Hamburg that produces sponge iron, used to create crude steel. In Germany, ArcelorMittal had already reduced gas demand by about 40%, compared with what it planned to consume at the start of the year.

“We have never had such upheavals in the energy prices,” said Reiner Blaschek, chief executive of the company’s German business. “Everything that is associated with enormous volatility in the short term is for us as a commercial enterprise, to put it mildly, pure poison.”

“You have to reinvent the whole energy supply chain on the go,” Mr. Blaschek added.

ArcelorMittal Germany has been buying sponge iron externally from the U.S. instead of making it locally using gas. 

Zinc stockpiles have almost run out in the EU, leading customers to import metal from China, according to metals industry lobby group Eurométaux. Analysts say European output of primary aluminum is dying out, leaving the continent with recycling operations that produce metal suitable for industries such as packaging, but not for wheel hubs, brakes or parts for airplanes.

Aluminum smelters are finding themselves not able to renew their power contracts. Companies need 15 megawatt-hours of power to produce a metric ton of primary aluminum, costing €9,000 at recent electricity prices, while a metric ton can be sold for less than €2,500, according to Germany’s metal association, WV Metalle.

 

We need immediate emergency aid now, otherwise we are threatened with deindustrialization in Germany,” said Franziska Erdle, WV Metalle’s general manager.

Alcoa Corp.’s San Ciprián aluminum plant in Spain, Glencore PLC’s Portovesme zinc smelter in Italy and Trafigura Group’s zinc factories in the Netherlands, France and Belgium have curbed or closed production. Half of the EU’s aluminum and zinc capacity is offline, on top of curtailments in silicon and alloys of iron, Eurométaux said in a letter to EU officials this month.

Tom Price, head of commodities strategy at Liberum, likens the shock to the surge in energy prices that killed off Japan’s aluminum industry in the 1970s. “This is such a severe event and Europe’s industrial base has become very heavily dependent on Russia for cheap energy inputs,” he said. “It may not be able to come back.”

Lower output from Europe’s factories threatens to cascade through supply chains. Auto makers have been hit both in their own dependence on gas for power and heat and indirectly through supply issues. VolkswagenAG said it has been stockpiling glass products, such as windows and windshields, fearing a shortage of gas could hit glassmakers.

A spokeswoman for Safran SA, a French maker of aircraft engines and defense-related equipment, said a fragile supply chain had limited the company’s ability to raise production. So far it has been able to buy metal from existing suppliers but the company is monitoring the situation, she added.

At Slovalco in Slovakia, Mr. Veselý sold the electricity the company had bought for the rest of the year, netting €160 million to spend on taxes and a possible restart in the future. Operators set about disconnecting podlike metal cells that turn white alumina powder into molten aluminum in the vast hall that is the factory’s nerve center. The hangar is also the factory’s biggest vulnerability, because the cells depend on a 285,000-amp current. 

Ten of the 226 cells remain in action, but are due to wind down by the end of the year. Firing the factory up again would require replacing their electrical connections—a process that would take a year and cost up to €90 million, Mr. Veselý said.

“Everyone is concerned,” said Tomáš Chrien, who has worked at Slovalco since 1993 and is an operator in the building next door, where molten aluminum is fashioned into solid cylinders. Marián Hárezník, a processes expert, said the job brings a good, stable salary and a sense of camaraderie. “No one expected we would be in a situation like this—ever,” he said.

 

Municipal official Martin Baláž said his big worry is the 2,500 jobs at companies that supply and service Slovalco. At one local firm, Remeslo Strojal, s.r.o., 50 employees whose job was to maintain the factory’s cells are looking for new work, he added.

Branislav Strýček, chief executive of utility Slovenské Elektrárne, A.S., which supplied power to Slovalco, worries many more Slovak firms will shut down because he estimates more than half haven’t procured power for 2023. 

“These electricity prices are sick,” he said, adding that he is in the odd position of running a utility and wanting the government and EU to take measures to limit prices. “Your customers will not survive so you’ll have no one to deliver [to].”

 

 

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