Potlines re-start in Washington, New York

Hydro-power pacts key factor as Alcoa calls back 260

Wenatchee Works in Malaga, Washington, is one of three Alcoa smelters with potlines re-starting during first half of 2011. Wenatchee Works in Malaga, Washington, is one of three Alcoa smelters with potlines re-starting during first half of 2011. Alcoa said Friday it would re-start potlines in three idled smelters, citing long-term, low- cost energy options at three locations with hydroelectric power.

Potlines are being re-started at Massena East, in Massena, New York; Wenatchee Works in Malaga, Washington; and Intalco, in Ferndale, Washington.

The Rockdale Operations smelter, which was powered by lignite-fueled generating plant, remains closed and is not effected.

Company officials continue to say the Rockdale smelter is being maintained in the event of a future re-start.

PR ICE U P—A lcoa said Friday’s announcement will create approximately 260 new jobs through recall and hiring.

The re- star ted facilities will create approximately 260 new jobs through recall and hiring and increase the company’s domestic production by 137,000 metric tons over the course of 2011 and 200,000 metric tons on an annual basis thereafter.

Alcoa has said metal prices are a key to future restarts. Price per metric ton on Friday, the day of the announcement had rebounded to $2,491.50 on the London Metal Exchange.

That’s up from a low of about $1,200 in 2009.

But power remains the key factor and at Rockdale Operations the power situation is complicated. Alcoa and Luminant were involved in a bitter lawsuit in 2010, won by Luminant.

CONTRACTS—“We compete in a global economy and power is a major cost in our operations,” said John Thuestad, Executive Vice President and Group President of Alcoa Primary Products.

“Thanks to continued partnerships with our energy providers and government officials, we have been able to secure our power needs to meet future demand, improve Alcoa’s competitive position and provide this positive economic impact,” Thuestad said Friday.

A lcoa said power rates at Wenatchee and Massena, where long-term contracts have been secured, are about 40 percent below worldwide averages. Intalco is operating under its current 17- month contract.

All the restarts will be powered by sustainable, renewable hydropower and will be free-cash-flow and earnings accretive in the first year.

“ We believe this additional capacity will be absorbed in the market as Alcoa meets rising demand for light, strong and recyclable aluminum from customers around the world, ” Bob Wilt, President of Alcoa’s U.S. Primary Products, said.

Restarting one potline at Wenatchee ensures Alcoa will meet the requirements of a new contract with the Chelan County Public Utility District.

The new 17-year hydropower contract goes into effect in November, 2011 and provides enough energy for increased production of 42,000 metric tons annually, bringing another 80 new jobs to the region.

At Massena East, a new agreement with the New York Power Authority allows three potlines to restart and replaces an agreement that was set to expire in April, 2011.

The restart will provide about 120 new jobs through recall or hiring, and secures the future of a total of approximately 385 jobs that support Massena East, according to Alcoa.

Intalco is currently operating under a 17-month contract with the Bonneville Power Administration (BPA) that provides 320 megawatts of power at the Industrial Power rate.

The restarts will bring about 60 new jobs to the region while negotiations on a long-term contract with BPA continue.

After the re-starts, Alcoa will have 674,000 metric tons of idled capacity, including the Rockdale Operations smelter, remaining.

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2011-01-13 digital edition

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