Gramercy's Noranda alumina plant could close; 444 jobs at stake

A foreign tax dispute and sagging commodity prices could lead a St. James Parish manufacturing plant to close, leading to the loss of 444 jobs.

Noranda ships bauxite that it mines in Jamaica to its plant in Gramercy, where alumina is extracted. That material then goes to the company's smelter facility in Missouri and is turned into aluminum.

Noranda is attempting to reach an agreement with the Jamaican government over the production fee the company pays the country for exporting bauxite. A previous deal expired at the end of 2014, and the parties have been in arbitration since then trying to reach new terms.

John Parker, Noranda's vice president for investor relations, said Jamaica is seeking fees that established in its original production agreement with the company, which he likened to the hotel rate structure posted on the back of every hotel room. A separate pact between the two reached in 2010 set a lower production levy for Noranda, based largely on the market value of bauxite. Jamaica is seeking a rate closer to the original terms, he said.

"We want a sustainable operation, which includes a sustainable economic structure with the government of Jamaica," Parker said.

The commodity price for aluminum has fallen nearly 50 percent over the past five years, dropping from $1.20 per pound in 2011 to the 60-cent range where it has languished for the past few months.

In addition to mining bauxite for its own needs, Noranda also provides the material to third parties. Its largest customer, Sherwin Alumina Co. in Corpus Christi, Texas, has filed for Chapter 11 bankruptcy, leading to a lapse in demand.

Noranda has also shut down two of its three pot lines in Missouri to account for the decline in aluminum production, requiring 190 layoffs.

Parker said the company is seeking new bauxite customers to replace Sherwin's demand, as well as new alumna customers to increase production in Gramercy. Should market conditions change and favorable terms are reached in Jamaica, the shutdown of Noranda's facilities could be temporary, he said.