November 13, 2014 / 11:39 AM / 6 years ago

CORRECTED-Dutch aluminium smelter Aldel to restart next year

(Corrects aluminium RIC in final paragraph)

LONDON, Nov 13 (Reuters) - Dutch smelter Aluminium Delfzijl (Aldel) will restart production early next year, owner Klesch Group said on Thursday, ten months after the smelter applied for bankruptcy.

Swiss-based commodities company Klesch said the decision was based on an improving business climate and a proposed deal to connect the smelter to the German power grid. The power deal could enable Aldel to purchase cheaper electricity from Germany.

Aluminium production is highly energy intensive and competitive power prices are essential for smelters’ survival.

Aldel will initially produce 100,000 tonnes a year of aluminium products, used extensively by the automotive industry, and aims to employ 200 people by the end of 2015. The Aldel website says the smelter has annual capacity of 170,000 tonnes.

Klesch Group, founded by American billionaire investor Gary Klesch, bought Aldel in 2009 but the smelter applied for bankruptcy in January after failing to negotiate an energy deal.

Low metals prices and oversupply had prompted cuts in production of the metal used in transport and packaging over the past two years. However, the market is expected to tighten significantly to register a 102,500 tonne deficit next year, boosting prices.

The benchmark London Metal Exchange aluminium price is up 15 percent this year, reversing a 13 percent drop in 2013. (Reporting by Harpreet Bhal; Editing by David Goodman)

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