Ameren will not extend Noranda aluminum plant's power contract

Noranda Aluminum Holding Corp will have to seek a new power supplier or negotiate a new contract with Ameren Corp in five years to keep its Missouri smelter running, the latest obstacle for its only primary aluminum plant.

Energy provider Ameren's Missouri division told Noranda last Thursday it will not extend a power contract for its smelter in New Madrid after the current contract expires in 2020, Noranda said in a regulatory filing on Tuesday.

That was the five years' notice needed to avoid an automatic one-year renewal.

The notice comes just one month after Missouri's state regulator approved a reduced power rate for the 253,000 tonne-per-year smelter, which Ameren Missouri had fought.

The news comes just as Noranda prepares to fight an attempt by the government of Jamaica to prevent it from exporting bauxite from the island due to a dispute over taxes related to a mine it owns on the island.

Noranda had previously threatened to shutter the Missouri smelter, which accounts for more than 14 percent of overall U.S. aluminum output, if a favorable deal had not been reached. It is Ameren's biggest customer in the state.

The two sides had initially reached the agreement in December 2004.

"The lifeblood of a smelter is a sustainable power contract," Noranda spokesman John Parker said on Tuesday.

Noranda believes Ameren Missouri is still obligated to supply power to the smelter even if the contract runs out because it is located within the power company's service area designated by the state.

"We don't believe their notice in itself changes its obligation to provide us power."

Parker declined to specify any potential alternative sources of power, but noted that the smelter is located along the Midcontinent Independent System Operator grid and could be supplied by other power companies.

In the filing, Noranda said it may seek to negotiate a new agreement with Ameren over the next five years or seek to enter into an agreement with another electric power provider.

Parker noted that the Ameren notice would have no immediate impact on business.