April 29, 2013 / 4:21 PM / 5 years ago

Century Aluminum to buy Rio Tinto's Kentucky smelter

* Rio Tinto had been considering shutdown at Sebree smelter

* Sebree, in Kentucky, employs more than 500

* Century announces tentative power deal at nearby Hawesville

April 29 (Reuters) - Century Aluminum Co said on Monday it would buy a Kentucky smelter from Rio Tinto and announced a tentative deal on power costs for a nearby smelter it had threatened to close, sending its shares up more than 9 percent.

Century, partially owned by a subsidiary of Glencore International PLC, will buy the Sebree smelter in Henderson County, Kentucky, from the global mining giant for $61 million in cash and receive $71 million in working capital.

Rio said in February it was exploring options for the facility, including shutdown, after Big Rivers Electric Corp proposed a rate increase.

Century also reached a tentative agreement to cut power costs for its nearby Hawesville smelter. It had threatened to close the facility unless it secured more favorable rates.

Aluminum smelting is a power-hungry process, and producers pay close attention to electricity costs.

“Gaining access to competitive energy is a crucial for the continued viability of these plants, and we hope that the tentative agreement we have reached for Hawesville will be the first step towards obtaining market-priced power,” Century Chief Executive Michael Bless said in a release.

Century was formed as a holding company for Glencore, and the Switzerland-based trader and miner is still a substantial investor, with a 42 percent stake as of June 30, 2012, according to Thomson Reuters data.

Sebree has more than 500 employees and annual production capacity of 205,000 tonnes of primary aluminum.

Shares of Century jumped 9.3 percent to $7.37 on the Nasdaq. (Reporting by Allison Martell; Editing by Frank McGurty)

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