Ormet's total losses increase to near $100 million

As it awaits a final regulatory decision that could decide its future, US aluminum producer Ormet Corp. continues to lose money and is fast approaching $100 million in total net losses since it filed for bankruptcy on February 25, according to court filings.

In August, the Hannibal, Ohio-based company lost another $11.7 million, up from a $6.4 million loss in July, despite idling two more of the six aluminum-making potlines at its 260,000 mt/year Hannibal smelter, according to a filing with the US Bankruptcy Court for the District of Delaware on Friday.

Ormet had cut its losses considerably from June, when it rang up $24.2 million in red ink.

Since the company last turned a profit of $4.3 million in January, it has lost $94.3 million, the filing says.

Sow sales, reflecting Ormet's current operation of only two potlines at Hannibal, fell substantially to $17.6 million in August, down from $28.2 million in July. Sow sales have declined steadily for most of this year after the company reported $32.9 million in January.

Tonnage figures were not disclosed in the filing and company officials could not be reached for comment Monday.

Ormet said it had $18.1 million in total revenue in August, compared with $28.9 million in total revenue in July.

Ormet is attempting to close on a $282 million sale to Minnesota's Wayzata Investment Partners. The bankruptcy court approved the transaction on June 4, but Wayzata conditioned the deal on Ormet receiving electricity rate relief for the smelter from the Ohio Public Utilities Commission.

The PUC is expected to rule in October on Ormet's request to set Hannibal's power rate at $45.99/MWh for the remainder of this year and allow the company to buy less expensive power off the wholesale market starting in January.

Ormet says its rates under an existing arrangement with American Electric Power have risen from $39.66/MWh four years ago to $62.83/MWh in June, a 58% increase. Average smelter power costs in the US are around $37/MWh.

AEP is opposing Ormet's application and has offered to let Ormet out of their arrangement for a termination fee of about $60 million, which Ormet says it cannot afford and will not pay.

If the PUC denies the request, which is supported by a number of federal, state and local officials, Ormet CEO Michael Tanchuk has said the company would have no choice but to begin liquidation proceedings.

Ormet also operates a 540,000 mt alumina refinery in Burnside, Louisiana.