London 08/02/2016 - Noranda Aluminium will cut the last of its primary aluminium smelting potlines at its New Madrid complex in March and is likely to sell its flat-rolled products busienss, after filing for Chapter 11 bankruptcy today and entering a restructuring process.
The decision was made "in light of the challenging market conditions for the aluminum industry and the recent disruptions in our primary business operation," the company's CEO Kip Smith said in a statement on Monday.
Aluminium prices are currently hovering close to six-and-a-half year lows at $1,500 per tonne - meanwhile US Midwest delivered physical premiums for aluminium ingots are 9-9.5 cents per pound down from highs of 24.15 cents per pound at this time last year.
Earlier in January, Noranda idled two of its three aluminium smelting potlines at New Madrid following an electrical supply circuit failure there.
Prior to this, New Madrid produced 263,000 tonnes of primary aluminium per year.
As part of the bankruptcy process, Noranda will receive up to $130 million in debtor-in-possession (DIP) financing from its asset-based-lenders and has received commitment for up to $35 million in incremental DIP financing from long-term lenders.
"Our objective is to stabilize our upstream operations as we explore ways to make them economically viable. Our downstream Flat-Rolled Products business is profitable," Smith said.
Nevertheless, Noranda's downstream flat-rolled-products division, which consists of four rolling mill facilities across Tennessee, North Carolina and Arkansas, could be sold to generate funds.
"It is likely that the downstream Flat-Rolled Products business will be the subject of a court-supervised sale process," the company said.
The New Madrid plant is supported by a vertically integrated bauxite mine in St Ann, Jamaica, and an alumina refinery in Gramercy, Louisiana; these continue to operate at full production the company added.
Elsewere, the company is currently the subject of a lawsuit for violating hazardous waste at its Gramercy alumina refinery in Louisiana.
Noranda has struggled financially over the last several quarters 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 in the year-prior period.
(Editing by Martin Hayes)