Idled New Madrid smelter targeted for partial restart late this year

Thursday, May 11, 2017
Notice the new name change from Noranda Aluminum to Magnitude 7 on the large sign entering the St. Jude Industrial Park.

Switzerland-based ARG International AG is working to get one pot-line back in production this fall at the long-idled, 263,000 mt/year New Madrid primary aluminum smelter, which has been renamed Magnitude 7 Metals, in southeastern Missouri, a spokesman for the smelter said Wednesday.

Donnie Brittain, who was employed by Noranda Aluminum, the smelter's former owner, for 30 years before the smelter closed in March 2016, said in an interview that ARG officials are negotiating an agreement with Ameren Missouri to buy 175-180 MW of around-the-clock power to supply one pot-line.

Ameren Missouri, a subsidiary of St. Louis-based Ameren, supplied New Madrid for years. Magnitude 7 Metals also is in discussions with Associated Electric Cooperative, a generation and transmission cooperative located in Springfield, Missouri.

New Madrid city administrator Richard McGill said in an interview Wednesday that the community supports the efforts of Magnitude 7 Metals.

"We don't have a power agreement yet," Brittain said. "We're in negotiations right now. Our plan is to get something producing in the fourth quarter of 2017" at the smelter that provided hundreds of good-paying jobs for decades in the New Madrid area.

Noranda shut the smelter shortly after the Franklin, Tennessee-based company filed for Chapter 11 bankruptcy reorganization February 8, 2016.

Matt Lucke, a former Glencore official who formed ARG, was successful in a court-sanctioned auction for the smelter last year with a high bid of $13.7 million. The deal closed October 28.

Although Brittain acknowledged ARG "failed in the process of getting the Gramercy alumina refinery," he said ARG keeps "a pretty good pulse" on the alumina market and should not have any difficulty in securing enough alumina for a partial smelter restart later this year.

Brittain said Lucke recently lured Robert Prusak, a former Glencore executive, out of retirement to serve as president and CEO of Magnitude 7 Metals. Prusak, who previously served as chairman of the former Ormet Corp. in Ohio as well, could not be reached Wednesday for comment.

According to Brittain, Magnitude 7 Metals -- named after a series of powerful earthquakes that shook the New Madrid area in 1811-1812 -- currently is a seven-employee company. Despite the company's optimism, the smelter's restart is not yet guaranteed. A new power arrangement at acceptable rates is crucial to any restart.

Indeed, Noranda's inability to secure less expensive electricity for New Madrid was a key factor in the company's eventual bankruptcy.

"We're looking to see if we have the ability to restart it with all the economic factors in line," he said. Alumina prices have fallen to just over $300/mt in recent weeks from about $360/mt earlier this year.

Brittain said Magnitude 7 Metals would like to see aluminum prices around $1,940/mt on the London Metal Exchange before finally pulling the trigger on the smelter restart. While the smelter has been maintained since its shutdown, the restart itself would be fairly expensive, probably costing millions of dollars, he noted.

Nevertheless, the company remain hopeful the first potline will be up and running again later this fall. If the first potline is operational this fall, the company tentatively is targeting the second quarter of 2018 for the second potline restart, he added.

Missouri's electric market is not deregulated, but because its load was so large -- around 500 MW -- and because of its importance to southeastern Missouri, the smelter had been granted what amounted to a variance to pursue the most attractive power arrangement it could get.