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
"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.
Rio Tinto Alcan announced plans
to divest 13 assets, including the Sebree smelter, in October
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
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
"They would account for so much
of the grid, they would practically own it," a second source
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).