Capital Tight in Depressed Primary Aluminum Market

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Stiff foreign competition and a cautious wait and see attitude has left most of the U.S. primary aluminum industry in the doldrums. Most U.S. based aluminum smelters are entering 2003 with reduced capital spending plans. Alcoa Incorporated and Century Aluminum, for example, have severely cut back capital spending for 2003.

While the U.S. industry is retracting and pulling back capital, international producers tend to be growing and are placing more aluminum on the market.

See related articles (free to premium subscribers):Alcoa Shifts North American Expansion Focus and Alcoa Targets Production Ventures in Feverish Aluminum Market.

Century Aluminum Incorporated (NASDAQ:CENX) (Monterrey, California) is in the process of constructing a simple casthouse at its Ravenswood primary aluminum smelter located in Ravenswood, West Virginia. The project involves the addition of a crane, pouring system, and aluminum sow casting and should be complete by June of this year. The simple casthouse will give the plant feedstock flexibility, and protect it from unexpected shutdowns from neighboring Pechiney who currently supplies Century Aluminum with sow.

Century Aluminum is also in the process of adding new pot tending and anode cranes in the Ravenswood aluminum smelter. The company will also replace a compressed air dryer some time this year. Other than these projects there is no additional capital being spent at the smelter.

Century is reportedly one of the few U.S. aluminum producers to be operating at full capacity of 465,000 tons per year at plants in Kentucky, South Carolina, and West Virginia. In addition to the 168,000 tons per year plant at Ravenswood, West Virginia the company owns 80 percent and operates a 237,000 tons per year plant located in Hawesville, Kentucky. Glencore owns the remainder.

Century also owns a 49.67 percent interest in the 215,000 tons per year Goose Creek aluminum reduction plant at Mount Holly, South Carolina. Alcoa, Incorporated owns the remainder and is the operating partner. Capital spending has been severely reduced at this plant. In 2003, Goose Creek is completing a baking furnace reline and doing a fan/electrical system upgrade. Engineering on these projects started two years ago and is just now coming to fruition. No other large projects are planned at these sites.