Alcoa shedding stake in Charleston-area smelter to partner Century Aluminum

Century Aluminum Co., a low-key partner in Alcoa's aluminum-making operation near Goose Creek, will soon be the sole owner of the smelter.

Chicago-based Century said Thursday it will pay $67.5 million to buy out Alcoa's 50.3 percent stake in the 34-year-old plant, where the companies have been in ongoing talks with power provider Santee Cooper for more competitive electric rates.

The Berkeley County site employs about 600 workers and has an annual production capacity of 229,000 tons of primary aluminum. When the deal closes this quarter, Century will own 100 percent of the business.

"While Mount Holly is a strong facility, its cost structure doesn't match Alcoa's criteria for a low-cost portfolio of upstream assets," said Bob Wilt, president of Alcoa Global Primary Products. "The sale will help achieve Alcoa's strategy to optimize its commodity portfolio and protect the facility's jobs and economic contribution to the local community."

The sale terms call for $67.5 million in cash and possible future "earn-out" payments if the smelter hits certain profit goals.

Because of its long affiliation as part owner, Century CEO Michael Bless said the deal "furthers our intent to increase our North American hot metal capacity and improve the value-added content of our product mix, including continuing to supply aluminum to the automotive, aerospace and other key industries throughout South Carolina and the U.S."

He said the plant is globally competitive in every area except the cost of power, but the transaction reflects Century's continuing confidence in domestic aluminum production.

"Mount Holly's future is directly tied to our ability to obtain the power needed to make the plant competitive in the global market, and we will work aggressively toward a solution that benefits everyone," Bless said.

The current power contract expires in December 2015.

"We look forward to working with the community and other key constituencies in South Carolina to ensure a long and productive future for Mount Holly and to continue to give South Carolina a foothold in the international aluminum industry," Bless said.

The sale is expected to have little effect on the negotiations over power rates, Santee Cooper spokeswoman Mollie Gore said.

"Santee Cooper looks forward to learning more about Century's plans and power needs in the near future," Gore said.

Paul Campbell, the former plant manager and retired president of Alcoa's Southeast region, said the sale will probably help in the power negotiations.

"If you go down to one owner instead of two, it might put them in a better position," said Campbell, a state senator and executive director of Charleston County Aviation Authority who was a design engineer on the Mount Holly plant when construction started in 1978 within a 5,000-acre timberland tract. "It gives them a stronger position to weather the storms."

He called the Mount Holly operation a survivor, since there are now less than 10 smelting operations open in the U.S., when there used to be 33.

"It's in good shape to be competitive," Campbell said. "It might need a little help on the power cost."

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