CHICAGO An interested party is said to be seriously mulling an acquisition of Rio Tinto Alcans aluminum smelter in Sebree, Ky., perhaps as part of a bid to get a better power rate for the facility, several market sources told AMM.
Well-placed sources pegged Monterey, Calif.-based Century Aluminum Co. as the most likely buyer due to possible energy cost savings, although Rio Tinto Alcan and Century both declined to comment on the growing market speculation.
"We of course would not comment on rumors of this sort," Century president and chief executive officer Michael Bless said in an e-mail to AMM on Feb. 8.
Rio Tinto Alcan announced plans to divest 13 assets, including the Sebree smelter, in October 2011 (amm.com, Oct. 17, 2011).
"Obviously a sale is one of the options that we have for Sebree, and its one that we are exploring, as we are other options," a spokesman for the Montreal-based company told AMM on Feb. 8, declining to comment further on potential bidders or a possible timeline.
One market source familiar with the matter said a company was "kicking the tires" at Sebree, although he noted that similar speculation also surfaced more than a year ago (amm.com, Oct. 18, 2011).
He said the potentially interested party would be well-aware that Rio Tinto Alcan gave notice in January to its energy provider Big Rivers Electric Corp., Henderson, Ky., of plans to terminate the power contract for the smelter if it cannot secure lower rates (amm.com, Feb. 4). Century also gave notice to Big Rivers in August of plans to close its Hawesville, Ky., smelter or seek power from another provider if it cannot get a more favorable rate (amm.com, Aug. 20).
Market sources said it would make sense for one player to own both the Sebree and Hawesville smelters, which together account for about 70 percent of Big Rivers power. A company that owned both might therefore have more success in rate negotiations than either company could do individually, sources said.
In the past, Ormet Corp. and Noranda Aluminum Holding Corp. have also been pegged as possible buyers for the Sebree site, but a number of market participants insisted this past week that Century remains the best fit given its Hawesville facilitys own power needs.
"They would account for so much of the grid, they would practically own it," a second source said.
Still, others questioned why Century would be interested in a facility that Rio Tinto Alcan is keen to divest, especially given Centurys focus on operations in Iceland (amm.com, Oct. 18, 2011).