| NEW YORK, March 28
NEW YORK, March 28 Century Aluminum Co
returned to the negotiating table this week in its efforts to
find affordable electricity to run its Hawesville, Kentucky,
aluminum smelter after a failed attempt to lower its costs with
"The legislation delayed progress in negotiations. But since
that died, we've restarted discussions," said Marty Littrel,
director of communications and community relations at power
supplier Big Rivers Electric Corp. in Kentucky, adding that
talks became active again this week.
Kentucky's legislature adjourned on Tuesday for the rest of
2013, leaving proposed smelter bills in both legislative houses
to die on the floor.
Both bills were attempts to lower power costs for the two
aluminum smelters operating in Kentucky - Century's
244,000-tonne-per-year Hawesville smelter and Rio Tinto Alcan's
nearby Sebree smelter with aluminum output of 194,000 tonnes per
Littrel added that Big Rivers also resumed talks with Rio
Tinto Alcan on Thursday, saying the company was
"trying to see if we can come up with a solution that's
equitable for all and to get them both market power. I think
that's what they both want."
With metal prices low and production costs high, U.S.
aluminum producers struggle with thin margins. In its attempt to
cope, California-based Century, controlled by commodities giant
Glencore International, took the dramatic step of
pushing for legislation that would exempt smelters from a state
law requiring consumers to take power from only one supplier.
This legislative change would have let it seek power in the open
Both Century and Rio Tinto broke their power deals with Big
Rivers in an attempt to find electricity in the spot market,
where prices are 25 percent lower than the fixed rate set in
their 15-year power contracts. Hawesville's contract is due to
end in August and Sebree's in January 2014.
The two aluminum producers account for about 70 percent of
the not-for-profit electric co-operative's business.
KENTUCKY JOBS AT STAKE
Century's spokesman Mike Dildine told Reuters on Thursday
that the company was committed to finding a way to keep
Hawesville open, but without cheaper power, it would shut the
"Our objective is to find competitive energy and to maintain
operations at Hawesville, and to keep those 700 direct
manufacturing jobs in western Kentucky," he said.
Bryan Tucker, a spokesman for Rio Tinto Alcan, refused any
comment beyond what the company has said in the past, "which is
that we continue to evaluate all the options for Sebree's
Big Rivers has given both companies the option to either
stay in its system and pay for electricity at cost or go to the
open market for power and pay for incremental costs that would
otherwise get passed on to the rest of its customers.
If they opt for spot power, Littrel said the aluminum
producers would give up their ability to return to Big Rivers on
a contractual basis if power prices rise again in the future.
In addition, he said, the smelters would have to agree to
abide by a Kentucky Public Service Commission's decision if a
disagreement arises about rates, incremental costs or who should
pay for them.
Meanwhile, if the smelters do leave Big Rivers' system, the
power generator may sell one of its plants or find other takers
for its power among other big industrial users, municipalities
or other utilities.
"We've got a good product, at a good price, and there are a
lot of other people who have expressed interest," Littrel said.
Big Rivers' rates are among the cheapest in the United
States, but are still higher than wholesale prices.
"They (the smelters) pay about $48 a megawatt-hour. You
won't find a lot of places with rates that low," he said.