Century Aluminum may have to curtail production at Mt. Holly smelter in South Carolina amid high energy costs until a new power deal is struck. Increase in energy costs has adversely affected operations at Century’s smelter. The facility with an annual production capacity of approximately 229,000mt is owned and operated by Century Aluminum of South Carolina (CASC).
Mt. Holly is operating at 50pc capacity due to production cuts caused by high energy costs. If CASC is not able to secure a favourable long-term power supply deal, the plant may have to further curtail operations. Production cuts increase expenses and hurt Century’s profitability as they reduce the plant’s cost saving advantages, according to the company’s Form-10K. The plant’s failure to secure 100pc of its power supply from the open market may even force Century to halt production at Mt. Holly.
In 2015, CASC signed an agreement for 25pc of its power requirement with the South Carolina Public Service Authority (Santee Cooper) on cost-of-service based rates. Mt. Holly obtains rest of its power supply from third-party generation on rates which are dependent on natural gas prices.