US aluminum producer Ormet, citing strong metal prices and a positive demand outlook heading into 2011, said Monday that conditions are "favorable"for the restart next year of two idled potlines at the company's 260,000mt/year smelter in Hannibal, Ohio.
Along with the possible restart, Ormet soon will make a final decision on purchasing a long-shuttered carbon anode plant in Mead, Washington, and reopening its 600,000 mt/year alumina refinery in Burnside, Louisiana, closed in late 2006 because of low alumina prices, Michael Tanchuk, the company'spresident and CEO, said in an interview. The anode and alumina plants would complement the potline restart.
"The market obviously has been positive," he said. As a result, Ormet is seriously considering restarting the two potlines that have been shut since early 2009 at the six-potline smelter. "We're actively working on that," hesaid. "Going forward, there's a good potential to do that." Tanchuk said he expects to make a final decision by year's end on there start. The potlines have been well maintained during their idling and probably would take about three months to get going again, he said. A restart would increase Hannibal's work force from the existing 870 union and salaried employees to 1,000. Hourly workers are members of the United Steel workers union.
Decisions on the anode and alumina facilities also are expected in thenext few weeks.
Tanchuk said Ormet has extended through the end of November a decision onthe purchase of the anode plant, part of the much larger Mead smelter operation that closed about a decade ago. Ormet has been performing "dued iligence" on the potential sale for most of this year. The anode plant was acquired several years ago by a St. Louis company.
While metal prices have risen significantly, Tanchuk said Ormet also isseeing upward pressure on the cost of alumina. "As a result, we are carefully analyzing a potential restart of our Burnside alumina refinery as a possible counter to rising alumina prices," he said.
Tanchuk said he began reviewing a possible Burnside reopening in April.
"When you see structural change in natural gas pricing, it makes us more competitive for an alumina operation," he said. "I think it may be worthwhile for us to restart that facility." In late 2006, when Chinese alumina came on line, alumina prices went from about $600/ton to $270/ton, he recalled. "Now, we're seeing a much stronger alumina market. The Platts FOB Australia alumina price was $368.7/mt as of November 15.
Ormet said negotiations are underway for 2011 alumina supply agreements.
Ormet said in the disclosure statement that in October, the companyentered into an agreement with Vale International to buy about 500,000 mt ofbauxite -- the raw material for alumina refining -- for 2011. This material would provide bauxite for Burnside, pending restart. If Ormet decides against restarting Burnside, it would resell the bauxite.
--Bob Matyi
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