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Barstow aluminum project unlikely to proceed

Aug 19, 2014 | 07:18 PM |

Tags  aluminum, billet, extrusions, Barstow project, California project, power costs, Charles Mitchell, Barstow City Council Eric Shen

NEW YORK — A proposed $1.5-billion secondary aluminum manufacturing facility in Barstow, Calif., is unlikely to reach the development stage, largely due to unfavorable electricity rates and the high cost of material needed for operations, according to Barstow city manager Charles C. Mitchell.

"Based on the continued analysis that has been conducted by both parties, at this point from an economic and practical standpoint it is unlikely the project will be developed as originally envisioned," Mitchell said during an Aug. 18 city council meeting, adding that the high cost of electricity in California was among the "primary economic feasibility challenges cited by the developer," Scuderia Development LLC.

"The average cost per kilowatt hour is estimated to be around 9 cents. In other parts of North America, the cost of electricity can be as low as 3 to 4 cents per kilowatt hour for a similar-type facility," Mitchell said.

While the project’s original design is unlikely to go forward, Mitchell said that city council members continue to hope for a "reduced scope" for the project.

"The city and the developer have both been exploring potential incentives to offset the ongoing cost of electricity. However, this factor has weighed heavily in the overall project feasibility analysis."

One source, who met directly with city council members in July, told AMM that city officials were also growing increasingly nervous over the source of funding for the project. Mitchell told AMM in June that Scuderia had not disclosed a list of its investors (, June 16).

Mitchell and other city council members, including Barstow mayor Julie Hackbarth-McIntyre, have not returned repeated requests for comment on the project.

Newport Beach, Calif.-based Scuderia has recently come under scrutiny for its alleged ties to China Zhongwang Holdings Ltd., the world’s second-largest producer of aluminum extrusions. Moreover, Barstow residents have repeatedly expressed concern over Scuderia’s limited Internet presence—the company does not have a website—and a general lack of publicly available information regarding the history and scope of the company.

Scuderia chief executive officer Eric P. Shen formed the company in June 2008, according to a document sent to the Barstow City Council and obtained by AMM. Scuderia has since been responsible for handling almost $500 million worth of aluminum projects in North America and currently generates annual operating revenue in excess of $1 billion, the letter said.

"Scuderia’s successful project delivery track record has afforded the firm ... the ability to operate without incurring any form of debt from any institution," the company said, adding that it has acquired almost 2 million square feet of industrial space in southern California for "the handling, storage, and delivery of aluminum feedstock."

These facilities have a handling capacity of more than 1 million tonnes of aluminum material, according to Scuderia.

Scuderia lists current aluminum extrusion and billet projects in New Jersey, California and Toronto. Notably, the company said it recently completed the "turn-key delivery" of a facility owned by Aluminicaste Fundición de México S. de RL de CV, a producer of secondary billet, slab and forging billet in Mexico. The facility was storing around 850,000 tonnes of aluminum extrusions at its San José Iturbide, Mexico, location as of July 2, two sources familiar with the matter told AMM (, July 2).

The stockpile is comprised largely of finished shapes, or extrusions, shipped from extrusion plants in China. The shapes allegedly are being remelted back to billet, which is then shipped to various countries, including the United States. The practice of importing extrusions from China and remelting them into billet is not illegal or known to violate any law, but extruders are concerned that Aluminicaste could be looking to circumvent anti-dumping duties (, July 22).

According to Scuderia, the Aluminicaste facility "ranks as one of the top casthouses in North America," with an "annual production capacity of 120,000 tonnes."

Aluminicaste’s website does not provide details on the company’s ownership structure. However, Aluminicaste president and chief executive officer Z.P. Liu also is president and chief executive officer of Liaoyang City, China-based China Zhongwang Holdings. A source familiar with the matter confirmed that Liu is the owner of both companies.

Scuderia, members of the Barstow City Council and China Zhongwang Holdings have not detailed the potential future relationship between Aluminicaste and the Barstow Aluminum project, although sources familiar with the matter claim that billet from the Mexican facility would have likely been shipped to Barstow to be extruded.

"Barstow has shown wisdom and vision in turning down a project of this magnitude," one U.S. extruder source told AMM. "The largess and excess in this extrusion and rolling mill facility is more ill-conceived than the companion billet casting facility recently completed in central Mexico that has to rely on trucking billet to the U.S. rather than cheaper rail service. Although there can be a case made for a billet casting facility due to a lack of supply, the construction of the Barstow project that would have to rob business from other communities to sustain itself is a self-defeating proposition."

Shen did not immediately respond to multiple requests for comment.


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