NEW YORK Ormet Corp. will shut a second potline at its 270,000-tonne-per-year Hannibal, Ohio, smelter, chief executive officer Mike Tanchuk told AMM.
Ormet began taking the potline offline last week and will complete the curtailment by Aug. 31, reducing its overall capacity by one-third, or about 90,000 tonnes per year, according to Tanchuk.
Ormet announced in July it would curtail one of the six potlines at Hannibal, citing low London Metal Exchange aluminum prices and high energy costs (amm.com, July 20). Three-month aluminum on the LME ended last week at $1,901.50 per tonne, down 19.1 percent from this years high of $2,349 per tonne in late February.
Ormet notified state officials in a July 19 letter that it may shut the entire operation, filing Worker Adjustment and Retraining Notification (WARN) Act notices to the 998 workers who would be affected by the shutdown (amm.com, July 25). Tanchuk declined to comment on Ormets plans for the remaining four potlines, telling AMM the company does not "speculate on the future."
Still, Ormet has said in the past that in addition to low LME prices, proposed power rate increases by American Electric Power Co. (AEP) would "strain" the smelters ability to continue operating (amm.com, July 5).
The Public Utilities Commission of Ohio (PUCO) voted in early August to approve a modified electricity security plan for AEP Ohio that would freeze current base generation rates through May 31, 2015. It also sets a schedule for AEP to transition to a competitive market in which generation rates will be set through a competitive bidding process beginning June 2015. AEP will conduct an energy-only auction for 10 percent of its standard service offer (SSO) load, followed by a second energy auction for up to 60 percent of the SSO load on June 1, 2014, and a third for 100 percent by Jan. 1, 2015, a PUCO spokesman told AMM. Auctions allow other generating and energy companies to bid for the right to sell to AEP customers.
"This order more evenly distributes the rate impacts among other customers. It also provides a relief valve ensuring that no ratepayers bill will be impacted more than 12 percent based on the ESP order, as well as providing AEP Ohio financial stability," PUCO chairman Todd Snitchler said in a statement.
Ormet has not officially responded to PUCOs ruling yet, Tanchuk said. "The ruling is complex so we are still evaluating the impact," he said, declining to comment further.