Slovalco has reached an agreement with the Slovakian government to restart 75,000 tonnes of curtailed primary aluminium capacity.
Production at the site is expected to resume before the end of the year, with Slovalco expected to invest €100 million and create 200 jobs.
Operations at the Hydro majority-owned site were curtailed in 2022 due to high power prices.
Hydro said the agreement with the Slovak government marks an important milestone.
It establishes the long-term framework conditions necessary for aluminium production, including a compensation scheme for indirect carbon costs under the EU Emissions Trading System (ETS).
Slovalco has also entered a long-term commercial power purchase agreement (PPA) with Vodohospodárska výstavba.
The decision to restart Slovalco is dependent on approval of the updated Slovak scheme for compensation of indirect carbon costs (ICC) by the European Commission.
The agreements enable the restart of the first 75,000 tonnes of a total 175,000 tonnes annual aluminium production capacity at the plant.
A restart of the remaining 100,000 tonnes will depend on the framework conditions beyond 2030 combined with additional power contracts.
50% of the EU’s aluminium production has been curtailed since 2022.
Eivind Kallevik, President and CEO of Hydro, said: "Restarting the smelter will strengthen Europe’s industrial resilience, reduce dependence on imports and supply European customers with aluminium carrying significantly lower carbon emissions than the global average."
Hydro owns 55.3% of the plant and 44.7% is owned by Penta Investments Group.