March 23, 2012 / 11:20 PM / 6 years ago

Century enters power talks in bid to restart smelter

* Aluminum plant shut since 2009

* Energy, labor agreements next steps

By Carole Vaporean

NEW YORK, March 23 (Reuters) - Century Aluminum Co said on Friday it has resumed talks for a power deal with Appalachian Power, a unit of American Electric Power Co. Inc., to supply its Ravenswood, West Virginia aluminum smelter as it moves closer to restarting the idled plant.

The 170,000-tonne-a-year aluminum plant was shut in 2009 due to low demand for the metal and falling aluminum prices.

AS the company moves forward with its plans to resume operations, its next steps are to negotiate an energy agreement and a labor contract with the local steelworkers union.

“So, those are the next two things that we’re working toward in order to restart,” Century’s spokeswoman said on Friday.

On February 29, Monterey, California-based Century announced that it struck a deal with the United Steelworkers union to restore healthcare benefits for retirees of the Ravenswood aluminum smelter as part of its move to restart operations.

The company spokeswoman said striking the deal on retiree healthcare was the first step in the process to restart.

She added that the plant will likely start up at less than full capacity, but the operating rate will depend on terms of the power and labor agreements, as well as the aluminum price.

“It’s really those three things. So, we’re working towards the two that we can have more impact on,” the spokeswoman said.

Restarting Ravenswood would also depend on the aluminum price, “because that’s necessary to have a profitably running facility,” she added.

Though she declined to put a level on it, she said Century, “Needs a reasonable expectation that aluminum prices will be sufficient to cover costs and be profitable. That will be determined by the energy agreement and the labor contract.”

The London Metal Exchange benchmark aluminum price closed Friday around $2,175 per tonne, well up from the near $1,300 a tonne level when the plant was idled.

West Virginia offered Century an inducement to restart the Ravenswood plant by passing a bill to give the company a $20 million annual tax break. The aluminum producer plans to hire about 400 people to run the smelter.

Once progress has been made on the power and labor deals the company will determine a timeline to restart operations.

“We’d love to do it as soon as possible, but this all takes a long time,” the spokeswoman said.

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