Century Aluminum lets 31 more Hawesville pots idle

NEW YORK, June 2 (Reuters) - Century Aluminum Co (CENX.O) delayed repairing 31 damaged pots at its Hawesville, Kentucky primary aluminum smelter in order to manage production in the current economic downturn, a company spokesman said. Under normal operating conditions a pot will go out every couple of years, he said. But Century has been slow to repair damaged pots as a way to control production levels. "What we have done is a prudent way of managing our production in this environment. We have just been slow to repair the pots. This is normal operating procedure," he said. Hawesville's near 250,000 tonne-per-year aluminum smelter has five potlines, each with 112 pots, but only four are currently running. In March, the Hawesville plant closed one potline, cutting 4,370 tonnes of monthly output, or about 52,400 tonnes a year, to reduce the aluminum producer's significant cash losses in the face of depressed global aluminum prices and demand. The cuts affected 120 employees, 10 or whom were laid off last Thursday, the spokesman for the Monterey, California-based aluminum producer said on Tuesday. In April, Century Chief Executive Logan Kruger said the company may cut smelter output further amid excess supply that was keeping prices below many producer's cash costs. When Century announced the Hawesville cuts in March, it also said its smelter was negotiating an "unwind" of its current power contract. Late last week, its Century Aluminum of Kentucky subsidiary said it was unable to move forward on a proposed long-term power contract for Hawesville. Significant weakness in both aluminum prices and wholesale electric prices prevented the two sides from reaching a deal. "We have a contract that expires at the end of 2010," the spokesman told Reuters, adding that Century was working to extend that power contract. "The unwind would have given us a contract that would have extended our energy supply through 2023. So, this does not hinder our near-term ability to operate," he said. Century, along with Western Kentucky Energy (a subsidiary of E.ON U.S.), Big Rivers Energy, and Rio Tinto Alcan (RIO.AX) (RIO.L), has been working for over five years to unwind an existing contract between Big Rivers and Western Kentucky Energy, it said. The proposed agreement would provide long-term and affordable power to the two smelters in western Kentucky. The aluminum producer said the new contract might support Hawesville's viability over the long-term, but its take-or-pay requirement could create short-term financial hardship. "Regrettably, after discussions with WKE and Big Rivers over the past several weeks, we could not find a solution for mitigating the risk. We will continue to work diligently to secure a long-term power agreement that satisfies the needs of all western Kentucky constituents," said Hawesville vice president and plant manager Matt Powell.