American aluminium smelter Century Aluminum issued a notice to its employees at the Mt. Holly aluminium smelter that it intends to shut down production at the plant if a suitable power arrangement is not obtained to replace the contract it has with the South Carolina Public Service Authority (Santee Cooper).
The contract for power between the two parties will expire at the end of this year, but it has been the subject of a great deal of litigation to date. Century attempted to reach an agreement with the city of Goose Creek to build a separate power plant from which Century would buy its power, but South Carolina courts rejected the arrangement when Santee Cooper brought suit to stop it.
Michael Bless, Century Aluminum Company President and Chief Executive Officer, noted the significant impact the closure of the plant would have on the area’s economy.
“Mt. Holly is the newest, most efficient and, except for its power costs, the lowest cost aluminum smelter in the United States, with a dedicated and highly skilled workforce and a reputation for quality production as assessed by a world class customer base. The closure of Mt. Holly would be a distressing and totally unnecessary tragedy for our 295 employees, their families and the broader community in South Carolina. With competitively priced power, Mt. Holly would return to full capacity, employing 600 persons, supporting over 2,000 total jobs and creating $1 billion in economic activity.”
Century Aluminum has sought to find other power suppliers for some time, saying that Santee Cooper’s prices are exorbitant and, coupled with the drop in primary aluminium prices, makes the aluminium smelter uncompetitive in the current market.
Santee Cooper countered Century’s efforts to leave, noting that the absence of Century’s business would cause the bill to maintain infrastructure fall upon the remainder of Santee Cooper’s customers, leading to a rise in their prices.
“The loss of one of the last six primary aluminum smelters in the U.S. would irreparably harm our country’s ability to produce this critical material. The Administration has sought to address the worst effects of unfair foreign competition and illegal subsidies that foreign governments provide to their companies; many of these subsidies are in the form of below-market power contracts. With access to competitive (not subsidized) market-based power, smelters in this country can and do compete vigorously on the world stage and expand their footprints; our plants in Kentucky are prime examples of this truism. Tragically, the situation in South Carolina represents the inverse, as Mt. Holly is effectively being required to pay a significantly above-market power price in the state.”
“We are willing to pursue any route that leads to a market-based power price for Mt. Holly,” Bless promised. “As we have said before, with market-based power all 295 jobs at Mt. Holly would be retained, an objective made even more critical during the uncertain times that lie ahead. Mt. Holly could begin the process of bringing the plant back to full production, eventually employing 600 people. Over $1 billion in economic activity in South Carolina would be protected. Lastly, a vital national resource would be preserved. We hope and pray that a rational assessment of such an arrangement and its results will lead to a result benefitting all.”
The notice to the plant’s workforce was issued pursuant to the federal Working Adjustment and Retraining Notification Act (WARN).