CHICAGO If a
deal between Century Aluminum Co. and its power suppliers in
Kentucky is not approved by Aug. 19, the company may have to
permanently close its smelter in Hawesville, Ky., a company
The Hawesville smelter
will stop operating on Aug. 20 if an agreement between Kenergy
Corp., Big Rivers Electric Corp. and Chicago-based Century is
not consummated, Sean Byrne, plant manager of the smelter, said
in recent testimony to the Kentucky Public Service Commission
economic reality is that, if operations cease at the Hawesville
smelter, it will, very likely, never reopen," Byrne said.
Thats because a
shutdown of more than three hours "freezes" molten aluminum in
the smelters potlines, making a $100-million investment
necessary to restart the operation, Byrne explained. "In a
globally competitive industry where margins are extremely thin,
a capital investment of this magnitude is not recoverable," he
operation is Centurys largest U.S. plant with a rated
production capacity of 244,000 tonnes annually and is the sole
producer of high-purity aluminum in North America, with an
average purity level of 99.9 percent, Byrne said. Electricity
accounts for about 40 percent of the smelters aluminum
production costs, he said.
Henderson, Ky.-based Big Rivers a 12-month power termination
notice for the Hawesville smelter in August , 2012 (
amm.com, Aug. 20). The company has said before
that it would close the plant if it could not secure a better
power deal, but a tentative deal has been reached by Century
and its power suppliers (
amm.com, June 12).
High-purity metal from
Hawesville is used by the smelters largest customer,
Southwire Co., as well as commercial aircraft, U.S. fighter
jets and warships, and the International Space Station, Byrne
said. The facility employs 671 people and together with
Centurys smelter in Sebree, Ky., which it acquired from
Rio Tinto Alcan (
amm.com, April 29), makes Kentucky the No. 1 aluminum
producer in the United States, he said.
While Century has
applauded the pact, the Kentucky Industrial Utility Customers
Inc. (KIUC) has expressed reservations. The association, whose
members include Cleveland-based Aleris International Inc.,
contends that the Century power deal would see other large
industrial users in the Big Rivers network facing rate
increases of 72 percent in the coming months, according to
another recent KPSC filing.
While not flatly
against the deal, KIUC wants to see Century responsible in the
future for paying back fixed costs incurred by Big Rivers to
create generation capacity Century had required. "If worldwide
prices for aluminum rebound ... (Century) will be able to and
should contribute to the recovery of Big Rivers stranded fixed
costs," the association said.
But Kentucky Attorney
General Jack Conway thinks the Hawesville smelters
problems should not be solved at the expense of other
electricity consumers in western Kentucky, who would see their
rates rise dramatically, according to a recent KPSC filing. The
commission has repeatedly tried to resolve problems related to
aluminum smelting in the state, "but despite these efforts ...
the economic problem of sustaining the aluminum industry in
Kentucky remains," Conway said.