Century, USW healthcare deal paves way for smelter restart
* Century shut Ravenswood smelter in 2009 amid downturn
* Century still needs labor pact and to secure energy supply
NEW YORK, March 1 (Reuters) - A deal struck by Century Aluminum Co and the United Steelworkers union to restore healthcare benefits for retirees of the U.S. aluminum producer's Ravenswood, West Virginia smelter could lead to its restart, the union said.
The healthcare agreement announced late Wednesday will help to improve relations between management and the unions. Relations have been strained since the smelter was shuttered two years ago due to low demand and falling aluminum prices.
The USW union, representing about 650 workers, said on Thursday it will help clear the way for the company, whose largest shareholder is Glencore International, to take steps necessary for a plant restart.
Late Wednesday, Monterey, California-based Century announced that the two sides had agreed in principle on the healthcare plan, contingent on ratification by the Ravenswood retirees.
The move means the company will begin contributions to a Voluntary Employee Benefit Association (VEBA) plan that will provide health insurance and other benefits to retirees, USW International President Leo Gerard said in a statement.
"This is a first step. A great deal of work lies ahead," Chief Executive Officer Michael Bless said in a statement.
In January, 2010, the USW said, Century ended health-care coverage for hundreds of Medicare-eligible retirees and dropped coverage for early retirees aged 55 to 65 in 2011.
The company did not return calls on Thursday seeking additional comment.
Soon after Century cut retiree benefits, the USW filed a lawsuit seeking their reinstatement. The current deal also settles that lawsuit, pending court approval, the union said.
While the deal is a step in the right direction, the three requirements given by the company for a restart - a proposed energy tax break from the state, a favorable energy supply contract and a new union-approved labor agreement - are still unresolved.
"A plant restart is dependent on an enabling energy contract, a competitive labor agreement and a reasonable expectation that aluminum prices are sufficient to provide for profitable operations," Bless said.
Last week Bless told analysts on the company's quarterly results call that Century had spent a significant amount of time in the latter part of 2011 working on reopening the plant. He said he hoped to have news on its progress by April.
"A major, major effort continuing this year, certainly for the first two months and we believe going forward, is the complex process whereby we hope to restart the Ravenswood smelter," he said.
Century is still in detailed discussions with its "three major constituencies"--representatives of retirees and active workers, the state executive and legislative branches, and the power company and relevant regulatory bodies.
"All of these talks are in reasonably sensitive stages at this point. Thus it's difficult to predict when we might get to the finish line. We hope to have a positive update for you when we announce earnings in April, hopefully sooner," Bless said on the call.
Bless said Ravenswood has also made detailed analyses of the work required to restart the plant, both for the capital and the hiring and training of employees.
"We continue to believe this will be a good investment for our shareowners, and we are determined to get it done," he said.
Earlier this week, benchmark aluminum prices on the London Metal Exchange reached $2,348.50 per tonne, their highest level since September. It has been above $2,000 per tonne since the beginning of 2012.
While the status of its power deal remains unclear, cheap gas reserves are plentiful in the region of the smelter, making an attractive power agreement for Ravenswood likely.
Century Aluminum owns primary aluminum smelting capacity in the United States and Iceland.