London 07/07/2016 - Century Aluminum will keep open its Mt Holly smelter after renegotiating an agreement with a third party to provide 75 percent of its power requirements, it said on Thursday.
The new market-based power agreement will allow the smelter, which has capacity of 244,000 tonnes per year, to continue to operate at half capacity while it seeks a competitive long-term arrangement.
The remaining 25 percent of the smelter's power requirement will continue to be supplied by state-owned Santee Cooper.
"We have regrettably not been able to achieve an agreement for full market power access; such a structure is required for Mt Holly's long-term competitiveness. We have achieved this current milestone due to the highly competitive nature of the wholesale power markets at the present time and additional cost reduction measures," Century president and CEO Michael Bless said.
The company hopes to be able to secure the purchase of its full power requirement, which would enable it run at its maximum capacity, rehire 300 employees and restore the $500 million in economic impact.
In the second half of 2015, Century asked Santee Cooper for permission to buy 100 percent of its power from market sources while the local utility would still provide transmission services for a fee. But that request was denied because it would lead to higher rates for other industrial customers.
The current arrangement will be in place until August 31 but there is a two-month termination clause.
The average price achieved by the current arrangement puts Mt Holly's power price in the fourth quartile of global power costs for smelters, Bless said earlier this year.
"Otherwise, this would be a very competitive plant due to its modern technology and an extraordinarily able group of employees. But the power price simply makes the plant uncompetitive and thus not viable over the long term," Bless said.
In addition to standard P1020 aluminium ingot, Mt. Holly also produces HDC ingot, extrusion billet and other value-added primary aluminium products.
(Additional reporting by Tom Jennemann, Editing by X)