Century Aluminum smelter closure seems unpreventable, says South Carolina governor

Governor Nikki Haley, South Carolina, said Wednesday, October 28, that the state has done all it can to keep Century Aluminum from closing its Berkeley County smelter and laying off 600 workers as a contractual impasse between the company and its power provider enters its final weeks.

“The main thing we can’t do is choose one business over another or do special favors for anyone,” Haley said during a visit to Goose Creek. Haley and state Commerce Secretary Bobby Hitt “pushed as hard as we could” to strike a deal with Century Aluminum, she said, “but we can’t go beyond what’s fair.”

Century Aluminum said last week it will close its Mount Holly plant by the end of this year if state-owned utility Santee Cooper does not agree to a plan in which Century would buy its electricity from an undisclosed, out-of-state supplier. That supplier would have to use Santee Cooper’s transmission lines to bring power to the smelter, a concession the utility says it can’t make because it would unfairly raise costs for other customers.

Century Aluminum, Santee Cooper’s biggest industrial customer, said it cannot continue operating if it has to pay current electric rates.

While Century Aluminum accounts for about 8.8 percent of Santee Cooper’s annual electric revenues, or roughly $175 million, the power supplier says that money simply covers what it costs to serve the aluminum provider through a combination of power generation and electricity purchases from a third party. The current power agreement - struck in 2012 when then-Alcoa threatened to shut down - expires December 31.

If Century Aluminum closes, Santee Cooper says the impact to its bottom line would be a wash.

The Chicago-based company has an annual payroll at the Mount Holly smelter of $50 million and a study by University of South Carolina economist Joey Von Nessen shows the plant has a direct economic impact of $945 million on the Charleston region.

Hitt, the state’s commerce secretary, acknowledges Century Aluminum’s importance but said his informal mediation between the company and Santee Cooper has gone nowhere.

Century Aluminum has idled or cut production at other smelters because of high electric costs. The company permanently closed its Ravenswood, W.Va., smelter and reduced output at its Hawesville, Ky., plant to 40 percent of capacity.

Santee Cooper’s Gore has said aluminum prices, not electric costs, are at the heart of Century Aluminum’s woes. Aluminum hit a six-year low of $1,479 per ton last week on the London Metal Exchange, and American producers say China is flooding the market with cheap exports, further undermining the weak prices.