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.
Felmans 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 statement.
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 statement.
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 costs" (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 month.
Silicomanganese is 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 2012.