Century Aluminum to operate Mt. Holly smelter at 50% capacity

Chicago-based Century Aluminum has announced its decision to operate the Mt. Holly, South Carolina smelter at 50% capacity. The company had earlier threatened to close the smelter on disputes with state-owned power supplier Santee Cooper over power rates at the smelter. Meantime, the company has initiated shutdown of its first potline starting Monday.

According to Century Aluminum, the power rate of nearly $50/MWh at the Mt. Holly smelter is one of the highest among aluminum smelters across the US. This makes it difficult for the company to compete with its peers under the current market situation. The existing deal with Santee Cooper is about to expire during the end of December this year. The company had warned of serious actions including closing of smelter operations, if Santee Cooper denies its request to lower the power rates in the new contract starting 2016.

The company currently buys 75% of Mt. Holly’s power from suppliers outside of South Carolina and the balance 25% from Santee Cooper, which transmits the power to the smelter. Century has proposed to buy all the power required by the smelter from a third party supplier, but still have Santee Cooper transmit the power to the smelter. Currently, it requires Santee Fee to transmit about 200 MW of outside power, sufficient to run one potline. The second potline will also be shuttered by December 26th, if an agreement could not be reached to operate the smelter at half capacity.

Meantime, the spokesperson of the state-owned electricity provider stated that it is unlikely to accept Century’s proposal to operate at half-capacity. Santee Cooper wants Century to extend the existing contract with no change. However, Century will be given an “opt-out” option after six months from the initiation of the new contract.