Century Aluminum Co.’s CENX fully-owned subsidiary, Century Aluminum of South Carolina, Inc., has reached an agreement in principle with Santee Cooper. Per the agreement, Century Aluminum’s Mount Holly plant in Goose Creek, SC, will operate at half capacity, while the state legislature seeks a long-term solution. The agreement is yet to receive approval from the board of directors of each organization.
The company intends to reach a long-term solution related to the plant as 300 employees are being affected due to this decision. Century Aluminum is seeking a legislative remedy from local legislators in this regard. The plant, which has an economic impact of nearly $1 billion annually, holds significant importance for the company as well as the state. As a result of the recent agreement, Century Aluminum will continue to operate under an uncompetitive power arrangement in the short term.
The company stated that it looks forward to working with the state and local officials to arrive at a long-term solution to restore the plant to full operating capacity, along with the 300 lost jobs.
According to the agreement, for 2016, the Mt. Holly plant will receive enough power to operate at around 50% capacity and retain about 300 positions. However, the 3-year contract may be terminated by Century Aluminum at any time, on a 60-day notice. The company plans to work with state legislators for passing legislation in 2016 that would allow it to use market power for all its power supply needs as well as operate Mt. Holly at full capacity and employment.
Shares of the company rose around 3% to close at $3.94 on Dec 21.
Century Aluminum currently carries a Zacks Rank #4 (Sell).
Better-ranked companies in the basic materials sector include Grupo Simec S.A.B. de C.V. SIM, Harmony Gold Mining Company Limited HMY and Richmont Mines Inc. RIC, all carrying a Zacks Rank #2 (Buy).
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