“COVID-19” crisis: LAlumina refinery in US expects to shut down

In Ascension Parish, USA, workers more than 300 will be facing job loses next month at Burnside Alumina refinery, a speciality alumina producer that has exhausted millions from a program of Federal Government that meant to protect American jobs during the COVID-19 epidemic.

As per industry sources, some potential buyers have approached the company, but there’s no deal to sell the business at this time.

Gabriel Henn, Plant Manager said: “The speciality alumina market demand was declined during the pandemic and the LAlumina LLC plant has tried hard to hold on, but the losses have mounted for months.” He explained with an example: “As smelter-grade alumina prices dropped by about a third in March, then prices for its premium product plummeted, as did demand.”

The alumina refinery was approved for at least $5 million but not more than $10 million through the federal Paycheck Protection Program on 28^th April’20 through a loan underwritten by Bank of America. The plant's owner missed the first round of Paycheck Protection Program funding, which ran out in days, but was later approved during the second batch of loan funding allotted by Congress.

“We were swallowing losses waiting for the second (fund) to come along,” Henn said.

Speciality alumina is applied in a variety of manufacturing processes, such as material for fire retardant products like carpets or electric cabling inside of new vehicles, the demand for which has evaporated during the economic recession.

“People stopped taking product offers because they were in trouble themselves in the downstream production, so they stopped taking raw materials from us,” Henn said.

In late March’20, LAlumina LLC communicated the Louisiana Workforce Commission that it planning to lay off 302 workers at the Burnside plant by early June’20 at the latest, but would keep bare minimum workers on site. At the time, the company had enough bauxite, the raw material it uses in the manufacturing process, for 65 days. The price of alumina had fallen below the cost to produce it, according to the company.

Subsequently, LAlumina has spent the federal loan money on its 302 workers' salaries, while the industry still has not recovered.

According to a letter to the state in early June, LAlumina conveys the message that its situation had not enhanced and that is expected to shut down the site completely. Employees are expected to be laid off between 30^th July’20 and 13^th Aug’20.

Most workers at the plant are represented by the United Steelworkers Union, which is expected to negotiate with the company about benefits for its contract slated to end in September’20.

The refinery can produce about 500,000 tonnes of alumina per year. The market value of the machinery, equipment and industrial buildings are worth $31.1 million, tax assessor records show. Additional land along the Mississippi River is worth another $61,900, as per records.

In July’19, the company took on the plant, which already had “significant losses,” and saw some success building market share in the industry until the COVID-19 pandemic impeded the global economy.

“We weren’t making a lot of money doing this even though we were doing fairly well until March. We had had some interest from outside parties about purchasing the plant and one of the companies still seems interested,” Henn said. “Time is running out and there’s no sign of the industry picking up in the speciality alumina area. It’s gotten very dead really.”

The Burnside manufacturing operation was previously owned by Ormet Corp. and would shut down intermittently because of volatile market conditions, but the parent company was large enough to cover worker pay during the slow times or renovate the plant for different uses to keep the lights on. That type of solution is out of reach for LAlumina as a smaller business.

Ormet had closed the plant for five years in 2006 only to reopen it in 2011 after getting state incentive support of $15.7 million over 10 years.

About a year later the company laid off 200 workers when it shut down again. In 2013, the Burnside plant was sold to Almatis. Then in July 2019, it was sold again to Arthur Metals, the parent company of LAlumina, whose biggest customer remains Almatis.