* Century shut Ravenswood smelter in 2009 amid downturn
* Century still needs labor pact and to secure energy supply
By Carole Vaporean
NEW YORK, March 1 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
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
"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
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.