Sherrod Brown (D., Ohio) is calling on the Public Utilities
Commission of Ohio (PUCO) to support Ormet Corp. as the
bankrupt aluminum producer testified recently in a regulatory
hearing before the commission that could determine whether it
comes as the Hannibal, Ohio-based companys top executive
predicted it could return to profitability in late 2014 or
High electricity costs
and low aluminum prices have forced Ormet to consider a
permanent closure of its Hannibal smelter, a move that could
see some 1,000 workers lose their jobs, Brown wrote in a letter
to PUCO dated Aug. 27.
"I strongly support
these workers and their efforts to save the plant," he wrote.
"As the third-largest aluminum smelter in the United States, a
closure could significantly impact our countrys aluminum
PUCO kicked off a
hearing Aug. 27 as it looks to mediate a power dispute between
Ormet and Columbus, Ohio-based utility American Electric Power
Co. Inc. (AEP) (
amm.com, Aug. 19).
For Ormet to break
even, it would require a London Metal Exchange aluminum price
of about $2,000 to $2,200 per tonne while operating at full
capacity, Ormet president and chief executive officer Michael
Tanchuk said during the Aug. 27 hearing.
The company is
operating only two of six potlines at the Hannibal smelter but
is preparing the other four potlines for a restart, Tanchuk
said. "People are digging the pots, getting them ready," he
said. But returning the idled potlines to operations will take
two to three months and depend on the outcome of the PUCO
hearings as well as LME prices, he said.
Asked if Ormet could
survive an extended drop in aluminum prices below $2,000 per
tonne, Tanchuk indicated this was unlikely. "This is a cyclical
market, and thats not ... what we believe will happen
with metal pricing going forward," he said.
The LMEs cash
primary aluminum contract ended the official session at
$1,775.50 per tonne (80.5 cents per pound) Aug. 30, down 16.4
percent from a 2013 high of $2,123 per tonne (96.3 cents per
pound) on Feb. 15.
Ormet expects to
return to profitability in late 2014 or early 2015 based on its
LME price forecasts, and assuming the company is able to build
its own power plant (
amm.com, July 16). The generating facility could
be in operation as soon as June 2015, Tanchuk said.
Ormet filed for
bankruptcy protection in February, citing high power and legacy
amm.com, Feb. 26). It has been at loggerheads with
AEP over the terms of its power agreement, and contends that a
better deal is imperative for it to emerge from bankruptcy as
an ongoing concern (
amm.com, Aug. 22).