WEBSTER COUNTY, Ky. (5/3/13) - After nearly three months of debates, which went from the board room to the state capital, the nearly 2,000 employees of three western Kentucky companies can breathe a little easier after the announcement that Century Aluminum plans to purchase Rio Tinto Alcan’s Sebree Works Smelter.
The first quarter of 2013 has been tense, as Kenergy Customers and employees of Big Rivers, Rio Tinto Alcan’s Sebree Smelter and Century Aluminum’s Hawesville Smelter waited to see what would come of the battle being fought over utility rates.
Rio Tinto Alcan’s Sebree Works Aluminum Smelter gave notice to Big Rivers Electric and Kenergy on Friday February 1, 2013 that they would be ending their power contract in 12 months, following the lead of Century Aluminum of Hawesville who filed similar paperwork in August. The notice from Alcan came as Big Rivers Electric Corp. was seeking a rate increase citing the impending loss of Century.
Rio Tinto, a UK based mining and processing company, says that after a review of their 2011 aluminum assets, it was concluded that the Sebree Smelter no longer fit with their long-term strategy. The rate increase caused by the expected loss of Century likely sped up the announcement.
The two aluminum smelters are the biggest customers of Kenergy, who in turn purchases their power from Big Rivers. The smelters provide as much as 70% of Kenergy’s annual income.
In a joint press release from Big Rivers, Kenergy and Century, it was announced Monday morning that Alcan had signed an Asset Sale Agreement with Montery, California based Century Aluminum. Century will pay $61 million dollars for the Sebree based facility, and assume ownership of an addition $4 million dollars in liabilities.
Sebree Works produced 205,000 tonnes of primary aluminum in 2012. The facility is estimated to support 1,800 jobs both directly and indirectly in the region, and contributes about $200 million a year to Kentucky through taxes, salaries and procurements.
With the purchase of the Sebree Works Smelter, Century Aluminum seems to be making a statement that they are planning on remaining in Western Kentucky.
“After months of negotiations, both parties have come to a framework for an agreement that will allow Century Aluminum to access market power,” said Marty Littrel, Director of Communications and Community Relations for Big Rivers Electric Corporation. “There is still a lot of work and specifics to be accomplished over the coming weeks as many approvals from various parties will be required.”
Once the agreement is in place, it still does not negate the need for an increase in wholesale electric rates.
“This arrangement is intended to have no impact to Big Rivers’ current rate proposal,” said Littrel. “All along, our main objective has been to help Century remain open but make sure our customers would not experience an even higher rate increase if Century remained open and bought power from the market.”
J-E News Editor
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