NEW YORK Horsehead Holding Corp. remained in the red in the third quarter amid higher production costs as it prepares to shut its Monaca, Pa., facility.
The Pittsburgh-based companys net loss of $3.5 million for the quarter ended Sept. 30 fell 61.5 percent from a loss of $9.1 million in the same year-ago period as sales rose 9.2 percent to $109.6 million. However, the loss grew more than fourfold sequentially (amm.com, Aug. 5).
"While shipments of zinc products and (electric-arc furnace) dust receipts strengthened compared with the second quarter of 2013, results during the third quarter were affected by lower production at the Monaca facility as we operated only five of six smelting furnaces for most of the quarter due to the temporary shutdown of two furnaces," Horsehead president and chief executive officer James M. Hensler said during an earnings call.
"As a result, production cost per ton was negatively impacted by the additional rebuild costs and lower production volumes," he said. "While this outcome is disappointing, it is not surprising, given the nature of operating conditions at the Monaca facility as we prepare for its closure in the next several weeks."
The company on Oct. 31 issued a Worker Adjustment and Retraining Notification (WARN) notice to affected employees at that facility, which is required to be issued at least 60 days prior to closure of the facility.
"We returned to a six furnace operation in early October and hope to maintain reasonable productivity levels through the fourth quarter until the smelter closes," Hensler said, adding that the companys new zinc production facility in Mooresboro, N.C., has entered the final stages of construction and is still expected to begin production by year-end.
"All of the critical processing equipment needed for start-up is now on site, detailed engineering has been completed for the zinc plant and installation crews are working around the clock in parallel with our commissioning teams. We have hired and are in the process of training approximately 80 percent of the work force," Hensler said, estimating the zinc plant will take six months to ramp up to production of 155,000 tons per year.
"The lead-silver recovery circuit is expected to start up late in the second quarter of 2014, with a 12-month ramp-up to full capacity," he added.
The company might operate a limited number of smelting furnaces at Monaca for a few weeks in 2014 to consume the remaining on-site inventory and provide some overlap with the Mooresboro ramp-up, he said, noting that a decision wont be made until the company is closer to the start-up date of Mooresboro.
"In anticipation of the closure, we have significantly curtailed the purchase of secondary feed materials for the smelter as we begin consuming the inventory of zinc-bearing materials in the Monaca plant," Hensler said.
The company is also likely to idle one of the kilns at the Monaca site before year-end if steel industry output doesnt increase, it added.