NEW YORK, Feb 7 (Reuters) - Rio Tinto Alcan said on Thursday the company is exploring several options for its Sebree aluminum plant, including a possible closure following a proposed rate hike by the Big Rivers electricity cooperative in Henderson, Kentucky.
“We are evaluating all options for the future,” a Rio Tinto spokesman said. “Closure is an option, but not the only one. We are exiting the contract which has lead to the step of looking at all options.”
According to the company website, the Sebree plant employs about 480 workers.
The spokesman said Rio Tinto Alcan notified Big Rivers Electric Corp recently that it will end its contract with the power supplier for its Sebree, Kentucky, smelter in January 2014.
Big Rivers was not available for comment.
If the rate increase is approved, the higher power rates would raise Sebree’s operating costs to an unsustainable level, the spokesman added.
Electricity already accounts for a third of the Kentucky plant’s aluminum smelting costs.
The 40-year old Sebree plant produced 197,000 tonnes of aluminum in 2011 and has the capacity to produce up to 199,000 tonnes per year.
In October 2011, Rio Tinto announced it would divest assets that no longer fit with the company’s strategy, with Sebree among those it categorized as non-core to its operations.
At that time, former chief executive Tom Albanese said assets identified for divestment were well-managed businesses, but were no longer aligned with the company’s strategy and would be better suited under new ownership.