By Paul Ploumis (ScrapMonster Author)
July 08, 2016 08:02:12 AM
CHICAGO (Scrap Monster): The Chicago-headquartered primary aluminum producer-Century Aluminum Co. has an agreement with a third party power supplier towards supply of 75% of the total power requirements at its Mt.Holly smelter facility in Goose Creek, South Carolina. The signing of the agreement has avoided the imminent shutdown of the facility, thus saving around 300 jobs.
The deal was reached with an undisclosed out-of-the-state utility just before the deadline. As per the deal, Century Aluminum will be supplied with 75% of the power requirement at the facility for a period of 18 months. The remaining 25% power will be supplied by state-owned power supplier Santee Cooper.
The deal will bring in a sense of certainty for the smelter operations for a period of at least 18 months. This will help the company to win back some of the businesses it lost due to fears of facility shutdown. Michael Bless, Century's president and CEO stated that the facility will continue to operate at 50% capacity. If it is successful in striking a deal for 100% power purchase, the company would rethink of running the plant at full capacity. This could create additional 300 jobs.
Bless added that efforts are on for a long-term arrangement to obtain full access to market power. Such a long-term agreement would help the company to operate the smelter more efficiently. The falling natural gas prices have led to sharp drop in electricity prices in open market. Any agreement to procure electricity at competitive rates will make huge difference to the smelter operations as electricity accounts for over 40% of the smelter’s operating expenses.
Bless also thanked the team at Mt. Holly for the safe and efficient operation of the plant especially during the times of uncertainty. The cost reduction measures implemented at the facility have paid-off, Bless added.
The company currently buys 75% of Mt. Holly’s power from suppliers outside of South Carolina and the balance 25% from Santee Cooper, which transmits the power to the smelter. Century has proposed to buy all the power required by the smelter from a third party supplier, but still have Santee Cooper transmit the power to the smelter. Currently, it requires Santee Cooper to transmit about 200 MW of outside power, sufficient to run one potline.
Meantime, Santee Cooper spokeswoman said that the utility plans to supply 25% of Mt. Holly’s power under the terms of the current contract. However, Century Aluminum has demanded for lower power rates. A consensus is yet to be arrived at. According to Century Aluminum, the power rate of nearly $50/MWh at the Mt. Holly smelter is one of the highest among aluminum smelters across the US. This makes it difficult for the company to compete with its peers under the current market situation. Century Aluminum had shut down its first potline in December last year and has been operating at half-capacity since then.
Century Aluminum’s wholly owned Mt. Holly aluminum smelter, located in Berkeley County, South Carolina, has a production capacity of approximately 231,000 metric tonnes of aluminum per year, when operating at full capacity. Mt. Holly, which opened in 1980, is the most advanced plant of its kind in the United States. It is also the first primary aluminum plant in the world to be registered completely to the ISO 9001 Quality System Standard.
Century Aluminum Company is a global producer of primary aluminum and operates aluminum reduction facilities in the United States and Iceland.