Century to idle one-third of capacity at Kentucky aluminum smelter

NEW YORK • Century Aluminum Co, controlled by Glencore Plc, said it will curtail one of three potlines at its Sebree, Kentucky, aluminum smelter by Dec. 31, the company's third capacity reduction in two months as weak prices bite.

The curtailment will reduce the 210,000 tonne-per-year plant's capacity by around 70,000 tonnes and comes just one week after it announced plans to close its 224,000-tonne Mount Holly, South Carolina, smelter by Dec. 31 if it does not receive a favorable power deal.

Century blamed the need to close the Sebree potline on low aluminum prices due to Chinese overcapacity and rising exports, resulting in a sharp drop in aluminum futures and the premiums paid for physical delivery of the metal have fallen sharply, harming producers.

In late August, it announced plans to reduce production at its 244,000 tonne-per-year Hawesville, Kentucky, smelter, which is currently operating at 40 percent of capacity. Only Century's 260,000 tonne-per-year smelter in Grundartangi, Iceland has remained unscathed.

Century spokesman Kenny Barkley told Reuters the closure was "very disappointing" and that the fall in aluminum prices on the London Metal Exchange to more than six-year lows this week at $1,460 a tonne prompted the decision to close.

"We've been monitoring the situation for weeks on end, and a decision had to be made," Barkley said.

The closure comes as pressure has mounted on U.S. authorities to take action on Chinese exports. U.S. producers have alleged that China mislabels exports as semi-fabricated aluminum in order to avoid an export tax on primary aluminum, only to have the products re-melted later in the supply chain.

The U.S. Aluminum Association has asked federal authorities to investigate the exports, and last week the U.S. Aluminum Extruders Council accused a Chinese extruder of evading U.S. duties as the dispute between the United States and the world's largest aluminum producer escalates.

Barkley called for action to stop the Chinese exports.

"The whole aluminum industry needs help," Barkley said. "There's only eight smelters left in the U.S. and two of them for sure, if not three, have reduced capacity. We've got to have somebody look at these issues on the national level."

Century plans to lay off around 150 of Sebree's 525 employees after the curtailment.

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