Winter Park, Florida 11/01/2016 - Noranda Aluminum Holding Corp has idled two of the three potlines at its aluminum smelter in New Madrid, Missouri, following an electrical supply circuit failure, the company said in a statement.
The circuit failure occurred last Thursday afternoon; the company is assessing the incident to determine its root cause. The third potline was not directly affected and production in that line has continued.
Noranda's upstream division includes a 263,000-tonne-per-year primary aluminium smelter near New Madrid, Missouri. The review of the incident and its impact on operations are in the early stages so the company has not established a timeline for resuming production in the two idled potlines, which can produce a combined 175,000 tonnes per year.
"The company is evaluating its ability to meet customer commitments for its primary aluminum value-added products," Noranda said, noting that it is taking steps to move to a one-potline operation and to adjust staffing and other activities to match this lower level of production at the smelter.
The New Madrid plant is supported by a vertically integrated bauxite mine in St Ann, Jamaica, and an alumina refinery in Gramercy, Louisiana. Noranda is now reviewing the impact to alumina production and could adjust output levels at both Gramercy and St. Ann, it said.
Meanwhile, its downstream business comprises four rolling mill facilities across Tennessee, North Carolina and Arkansas.
"As Noranda's flat-rolled products business sources metal from a portfolio of suppliers, the company believes it has access to sufficient sources of aluminum to meet customer commitments for flat-rolled products," the statement said.
While no estimates are available at this time regarding the financial impact of the incident, Noranda anticipates a substantial portion of costs and damages resulting from the incident will be covered by property and business interruption insurance.
Noranda has struggled financially over the last several quarter because of low aluminium prices. It posted a net loss of $175.1 million in the third quarter compared with a loss of $3.9 million a year prior.
Sales were $309.5 million in the third quarter of 2015, down from $332.7 million in the prior quarter and $361.4 million in third quarter of 2014, primarily due to the lower average Midwest transaction price and reduced primary metal shipments.
"Aluminum prices at these levels challenge the financial resources of substantially all aluminum producers, not just Noranda," Noranda said in its third-quarter earnings report in October.
Noranda announced in June that it hired Morgan Stanley as a financial advisor to help evaluate a variety of strategic alternatives. The company did not update the progress for this initiative, other than to say that it is exploring a "very broad portfolio of alternatives".
(Editing by Mark Shaw)