Noranda Aluminum hit by power, export regulatory hurdles

Author: Paul Ploumis03 Jun 2015 Last updated at 03:52:51 GMT

JEFFERSON CITY (Scrap Monster): Tennessee-based Noranda Aluminum is reportedly facing fresh challenges. The unexpected termination of power contract by Ameren Missouri and Jamaica’s lawsuit seeking suspension of bauxite exports by the company are likely to pose threat to the company. However, Noranda Aluminum spokesperson stated that the company is hopeful of addressing the issues so that they will not have any material impact on the company’s operations.

The Jamaican government had sued the company in the court demanding higher levies on bauxite mined at St. Ann mines. The government had requested the court to issue an injunction order to suspend export of mined bauxite by the company. The government wanted Noranda to pay a levy of $7.50/mt for mined bauxite, three times higher than $2.50 per mt being levied presently. The court hearing on the matter is expected later in June. The levy dispute is likely to affect mining operations at St Ann, having an approximate annual capacity of 4.5 million mt.

Meantime, Noranda has expressed its willingness to resolve the matter through arbitrations. Further, it stated that the company is also looking for alternative sources of material.

Secondly, the company has received a formal warning notice from Ameren Missouri stating that it plans to terminate the existing power contract with Noranda’s 263,000 mt/year New Madrid primary aluminum smelter in May 2020. The notice was quite unexpected and had stated no specific reason for the planned termination.

In April, The Missouri Public Service commission had reduced the power rate for the Noranda smelter to $36/MWh. But, the company had requested the state regulator to further lower the costs. Ameren Missouri had denied the request. The company spokesperson stated that the company will soon decide its course of action in response to Ameren’s notice.