NEW YORK Felman
Production LLC said it will be able to restart silicomanganese
production at its New Haven, W.Va., plant if its request for a
10-year special-rate electricity contract is approved by the
states Public Service Commission (PSC).
The company applied
for the special rate Aug. 30, claiming the deal would ensure
other West Virginia ratepayers do not incur any higher costs
than if Felman were forced to shut down permanently.
special-rate request is specifically tied to a target margin
that will be derived from independent indices related to the
selling price of silicomanganese and the cost of raw materials,
excluding electricity, the company said.
"When prices are low,
Felman will get a discount on its electric rate. When prices
are high, Felman will pay a premium. This arrangement should be
very helpful in enabling us to operate continuously in varying
market conditions," Felman plant manager John Konrady said in a
The discount would be
limited to $9.5 million per year, which Felman claims is the
amount of Appalachian Power Co.s fixed cost that Felman
currently covers and the amount of fixed costs that would be
incurred by other West Virginia ratepayers if Felman were
forced to shut down permanently.
The company, a wholly
owned subsidiary of Miami-based Georgian American Alloys Inc.
(GAA), said the plan would enable it to restart production at
the New Haven plant, which it claims had operated at a "sizable
loss" in five of the past six years.
"We remain committed
to the New Haven operation, where weve made significant
capital investments in recent years. But unless we can obtain
more flexible electricity rates, which account for more than 20
percent of our cost, our continued operation is in jeopardy,"
GAA chief executive officer Mordechai Korf said in a
Felman is seeking an
expedited review of the proposed special-rate contract,
requesting that the PSC issue a final decision before the end
of 2013. The PSC is expected to hold public hearings on the
request as well as accept written comments.
Felman announced a
temporary shutdown at New Haven June 28 due to "challenging
silicomanganese market conditions and rising manufacturing
(amm.com, June 28), and the company recently laid
off 107 employees, having previously laid off 38 workers in May
amm.com, Aug. 22).
The New Haven facility
produces an average of 9,000 tonnes of silicomanganese per
currently trading in a range of 49 to 51 cents per pound,
according to AMMs most recent assessment, having
dropped steadily from 73 to 79 cents per pound in March