Century maintains commitment to plant
Century Aluminum executives said they remain committed to restarting the Ravenswood plant, despite disagreeing with the power rate arrangement offered last month by the state Public Service Commission.
CEO Michael Bless said Thursday evening the company hopes to work out its differences with the PSC regarding the power rate structure.
"We still believe strongly that a pathway should exist that makes sense for all constituencies to get this plant restarted," Bless said during a conference call with investors and analysts.
"We remain committed to get this plant restarted," Bless said. "We continue to believe it remains a good investment for our shareowners, and it goes without saying it will be a good thing for Ravenswood and the surrounding communities to get this plant up and running again."
Century reported its third quarter earnings Thursday evening.
The Monterey, Calif.-based company reported an adjusted net loss of 25 cents per share in the quarter, slightly ahead of analyst expectations of a 26-cent loss.
The company reported third quarter sales of $304.6 million, down from the $345.6 million in sales during the third quarter of 2011. Aluminum shipments were up at 163,431 metric tons, compared with 150,832 tons shipped in the same period last year.
Century has been working with the PSC all year to get a discounted power rate for the Ravenswood plant. That plant shut down in 2009 after the global recession triggered a massive drop in global aluminum prices.
While aluminum prices rebounded to about $2,200 per ton in the last quarter, stagnant global economic conditions have caused prices to tumble back below $1,900 in recent weeks.
Century officials have said these price swings are the reason why they would like a variable rate for the Ravenswood plant.
While the PSC did grant Century a variable-rate structure, regulators did not allow other ratepayers to bear the burden of the company's lower rate. Instead, they said Century would be on the hook for any short payments at the end of a 10-year contract period.
On Thursday's conference call, Bless said the restart of the Ravenswood plant remained a top priority but parts of the PSC's plan "simply don't work for us."
The company has asked for reconsideration, although the PSC has made clear in filings it will not consider pushing any additional costs onto other ratepayers.
Bless said the PSC's rate structure would not allow the company to recoup its $90 million in upfront restart costs. If they must use the PSC plan, the company would have to wait for the global economy to improve.
"We wouldn't restart the plant under current economic conditions," he said. "In essence we would sit and wait for better economic conditions."
The PSC plan also requires Century to sign a formal guarantee that it or its parent company will pay for any power costs that remain at the end of the 10-year rate plan.
The company argues that guarantee should come only from the Century of West Virginia subsidiary company, not the parent corporation. Bless said taking on the guarantee could hinder Century Aluminum's overall corporate finances.
"We have obviously said that that part of their proposal makes no sense to us," Bless said. "To us, that would simply be frankly borrowing our losses, and on behalf of our shareowners, that makes no sense at all."
Bless said the company expects to hear something back from the PSC in the next week.
Contact writer Jared Hunt at firstname.lastname@example.org or 304-348-5148.