Century Aluminum resumes Kentucky power talks after bill dies

Thu Mar 28, 2013 7:47pm EDT
 
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By Carole Vaporean

NEW YORK, March 28 (Reuters) - Century Aluminum Co returned to the negotiating table this week in its efforts to find affordable electricity to run its Hawesville, Kentucky, aluminum smelter after a failed attempt to lower its costs with legislation.

"The legislation delayed progress in negotiations. But since that died, we've restarted discussions," said Marty Littrel, director of communications and community relations at power supplier Big Rivers Electric Corp. in Kentucky, adding that talks became active again this week.

Kentucky's legislature adjourned on Tuesday for the rest of 2013, leaving proposed smelter bills in both legislative houses to die on the floor.

Both bills were attempts to lower power costs for the two aluminum smelters operating in Kentucky - Century's 244,000-tonne-per-year Hawesville smelter and Rio Tinto Alcan's nearby Sebree smelter with aluminum output of 194,000 tonnes per year.

Littrel added that Big Rivers also resumed talks with Rio Tinto Alcan on Thursday, saying the company was "trying to see if we can come up with a solution that's equitable for all and to get them both market power. I think that's what they both want."

With metal prices low and production costs high, U.S. aluminum producers struggle with thin margins. In its attempt to cope, California-based Century, controlled by commodities giant Glencore International, took the dramatic step of pushing for legislation that would exempt smelters from a state law requiring consumers to take power from only one supplier. This legislative change would have let it seek power in the open wholesale market.

Both Century and Rio Tinto broke their power deals with Big Rivers in an attempt to find electricity in the spot market, where prices are 25 percent lower than the fixed rate set in their 15-year power contracts. Hawesville's contract is due to end in August and Sebree's in January 2014.

The two aluminum producers account for about 70 percent of the not-for-profit electric co-operative's business.   Continued...