NEW YORK Noranda Aluminum Holding Corp. anticipates that an ice storm that hit its New Madrid, Mo., smelter nearly four years ago will have a negative impact in the fourth quarter.
During the January 2009 ice storm, Noranda shut two of its three potlines down at New Madrid, but kept one "operating through and immediately after the ice storm," Layle "Kip" Smith, Noranda president and chief executive officer, told analysts on a call following the release of the companys third-quarter earnings.
"During that outage, we were getting surges of power. Wed have power for a while, then it would fail, then it would come back again. There were lots of ups and downs," Smith said.
These power outages only started to take their toll in the third quarter of 2012, when Noranda observed "higher than normal failure rates for the ...pots that it operated during, through and immediately after the ice storm." This caused them to "expire earlier than expected and within close proximity to each other" during the quarter, Smith said.
Typically, Noranda might have two to three pots down for relining at any given time. However, during the third quarter of this year, Noranda was forced to reline the majority of the pots in the first potline simultaneously, representing some 25 percent of its capacity.
"This was not a planned series of relining. It was a result of the power outage we had in 2009," Smith said.
It cost the company around $2 million to $3 million in the third quarter, and Noranda forecasts a similar impact in the fourth quarter.
External shipments declined as a result of the relining, with Noranda shipping 120 million pounds of primary aluminum in the third quarter, down 3 percent from 123.8 million pounds in the same quarter a year ago.
Primary aluminum shipments through September also declined 4 percent to 369.1 million pounds from 383 million pounds in the same period of 2011.
However, Smith maintained that the brunt of the maintenance is behind the company.
"Weve brought in additional resources to increase our pot-building abilities (and) are working on this. Getting pots back to normal levels is a top priority. We are putting more pots back into production each week," Smith said. "The tag line is, we believe weve now turned a corner, and were putting more pots in service.
"The team did a tremendous job in 2009 keeping the line going, and we now (know) what happens to a potline that is exposed to that kind of power outages," he added. "We hope to never see it again."