Century Aluminum will continue operating its Mount Holly, South Carolina, smelter at half capacity after agreeing to a three-year deal with power provider Santee Cooper, Century and Santee Cooper said in separate statements. The 224,000 tonne-per-year smelter had been slated to close on December 31 if a favourable power deal was not reached. Century stopped production at one of the plant's two potlines earlier this week, and the plant will produce around 112,000 tonnes for the foreseeable future.
The deal makes Mount Holly the third smelter in the past month to be saved from harsh output cuts announced this fall, as tumbling London Metal Exchange aluminum prices and a declining Midwest premium , paid on top of the LME price for physical delivery, pressure US producers. It comes just one day after Century said it would continue to operate its Sebree, Kentucky, plant at full capacity of 210,000 tonnes per year in 2016. It had previously planned to slash output by a third.
Last month, Alcoa said it would keep operating its 130,000 tonne-per-year Massena, New York, smelter, which had been slated for closure, after receiving nearly $70 million in aid from the state government. Under the deal announced on Friday, Century would continue to buy three-quarters of Mount Holly's power from an out-of-state supplier and the rest from Santee Cooper, which transmits all the power to the smelter.
Century had previously proposed purchasing all its power from an out-of-state supplier, but Santee Cooper opposed it on the grounds that it would raise power costs for other customers. Century can terminate the deal at any time with 60 days' notice. Century Chief Executive Mike Bless said the deal will buy the two parties time to reach a "long-term solution" with the help of the state legislature, which could change laws to allow a more favourable deal for Century.
"We agreed to this arrangement at the request of many of our local legislators in order to allow them to seek a legislative remedy," Bless said in a statement. Century is considering petitioning for a trade case against China, which it accuses of dumping subsidised metal in the United States and blames for the need to cut output at Sebree and its Hawesville, Kentucky, smelter, which is running at 40 percent. But it has attributed its threats to close Mount Holly on high power prices, although Santee Cooper has blamed low aluminum prices.