Century makes restart of Hawesville aluminium smelter official

Century Aluminum Co's plans to restart production at its smelter in Hawesville, in the US state of Kentucky, are now official thanks to US President Donald Trump signing the order to levy a 10% tariff on the country's aluminium imports last week.

The United States-based company will follow through with previously discussed plans to turn production at the plant back on - going as far as restarting all three previously curtailed potlines and bringing 150,000 tonnes of production back online, Century president and chief executive officer Michael Bless confirmed during a conference call on Monday March 12.

"The restart is justified by attractive financial terms," Bless said during the call, adding that the company expects the restart of the potlines to cost about $115 million. This would cover rebuilding the idled potlines along with the cells that were cannibalized while curtailment measures were active at the smelter.

The US Midwest P1020 premium has risen 29.8% since Trump first publically confirmed the Section 232 tariff on March 1 and is up 95.8% since the start of the year. American Metal Market’s most recent assessment places the aluminium premium at 18-19 cents per lb.

According to Bless, Century expects the US Midwest premium to continue rising in order to price in the effect of the tariff, and it’s one big reason that the company has opted to move forward with the Hawesville restart.

Hawesville's product line will be the first to come back online, which Century anticipates being complete by the end of the third quarter of this year, Bless said. The entire restart program is expected to be complete by the second half of 2019.

Century had curtailed production at the smelter to 40% of maximum capacity in 2015, citing tough market conditions.

Bless also elaborated on the company’s current position on its embattled Mount Holly smelter in the US state of South Carolina, noting that because of the difference in power contracts between that smelter and in Kentucky, Trump’s tariffs are not enough to drive Century to restart curtailed capacity there.

“The delivered price [for power] to Mount Holly is 35-40% higher than the delivered price to our Kentucky plants,” Bless said.

The company is “cautiously optimistic” that a renewed legislative push to adjust Mount Holly’s power contract could succeed, and then a restart could become reality, Bless said.

Excluding the smelter's current power costs, in every other way “the economics at Mount Holly are favorable,” according to Bless.

Kirk Maltais

kirk.maltais@fastmarkets.com

Published

Kirk Maltais

March 13, 2018

01:59 GMT