OWENSBORO, Ky. (6/18/13) - Officials with Century Aluminum took the first step last week towards solidifying the status of Rio Tinto’s Alcan Sebree Works Smelter by completing the acquisition of the plant and its 500 employees.
The future of both plants has been in question since Century notified Henderson-based Big Rivers Electric in August 2012 that it intended to cease electric service in 12 months.
That was the first domino to fall in a series of events that threatened the economic fabric of the surrounding counties. In January 2013 Big River’s filed for a more than 20% rate increase with the Public Service Commission in Frankfort, stating that with the loss of its biggest customer that it would need to recoup money from everyone else.
A few weeks later Rio Tinto notified Big Rivers that it also intended to cease electrical operations.
Alcan officials stated that it was paying around $50 per megawatt-hour (mWh). The proposed increase would take them to about $60, which officials report is considerably higher than the national average paid by American aluminum smelters. $60 a mWh would be around 6 cents per kilowatt-hour (kWh).
The battle, in the end, moved to the state capitol, where legislators debated over the right of the two smelters to purchase electricity on the open market.
In mid-April Century issued a conditional notice to employees at its Hawesville, KY aluminum smelter of its intent to curtail 100% of plant operations on August 20, 2013 if the plant could not secure a competitively priced power contract. The announcement was made pursuant to the federal Worker Adjustment and Retraining Notification Act (WARN). The company also gave conditional notice to terminate its supply contract with its largest customer, the Southwire Company, given the potential plant closure effective August 20.
On April 30, 2013 Big Rivers and Century reached a tentative agreement. Under the provision, the electric supplier would purchase the power on the open market and then pass it to Century at market price, plus the additional costs incurred by the transmission.
A day later, in a joint press release from Big Rivers, Kenergy and Century, it was announced that Alcan had signed an Asset Sale Agreement with Montery, California based Century Aluminum. Century agreed to pay $61 million dollars for the Sebree based facility, and assume ownership of an addition $4 million dollars in liabilities.
Last week Century Aluminum Company announced today that its wholly owned subsidiary had completed the transaction with Rio Tinto Alcan, Inc. to acquire substantially all of the assets of the Sebree aluminum smelter.
“We are really happy to welcome the men and women of Sebree to Century,” commented Michael Bless, President and CEO. “With the changes occurring in U.S. energy markets, we believe Sebree, along with our existing smelter at Hawesville, will be competitive in the global market. We see a great opportunity for these facilities, which are located about 60 miles apart, to work together and share best practices in pursuit of safety and operational excellence.
“Access to market-based power is a critical enabler for sustained operations at Hawesville and Sebree. We believe the framework reached with the power provider for market-priced energy for Hawesville will serve as a model for Sebree.”
Deeds filed in the Webster County Clerk's Office record the transfer of properties in Webster and Henderson Counties from Alcan Primary Products Corporation to Century Aluminum Sebree LLC, presumed to be the future name of the facility.
Century Aluminum Company owns primary aluminum capacity in the United States and Iceland. Century’s corporate offices are located in Chicago, Illinois.
The Sebree smelter, located in Henderson County, Kentucky, employs over 500 people and has an annual production capacity of 205,000 metric tons of primary aluminum.
J-E News Editor
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