South Carolina smelter shutdown seems imminent as stalemate goes on

The Mount Holly aluminum smelter in Goose Creek may shut down at the end of this year after owner Century Aluminum and electric utility Santee Cooper failed to reach an agreement on a new power contract for the plant.

Michael Bless, Century’s president and CEO, said the closure “would be a tragedy” and that he remains hopeful for a last-minute reprieve. The current contract expires Dec. 31.

“We want in the worst way to find a way to keep that plant running,” Bless said of the smelter, which employs about 600 workers.

The stalemate between Century and Santee Cooper intensified Monday as the utility’s board of directors voted 10-0 to reject the company’s contract proposal.

Bless said Monday that Century cannot operate under Santee Cooper’s counter-offer.

Century has been buying 75 percent of its power from an out-of-state provider since its contract was renegotiated in 2012.

Santee Cooper provides the remaining 25 percent and transmits all of the power to the Mount Holly site off U.S. Highway 52.

Santee Cooper’s board on Monday offered to renew the current agreement for another three years without raising Century’s power rates.

Leighton Lord, the board’s chairman, said the utility’s deal is “the most competitive offer that will keep this plant open.” The agreement has saved Mount Holly about $130 million since 2012, according to Santee Cooper.

Century says the current deal is no longer financially viable.

The company wants to buy all of its power from an unidentified third-party supplier and pay Santee Cooper about $60 million over five years to transmit the electricity to Mount Holly.

Santee Cooper’s board rejected that proposal, saying it would force its other industrial customers to subsidize Mount Holly.

“We’re offering the best deal we can without increasing the costs to other customers,” Lonnie Carter, Santee Cooper’s president and CEO, told about 30 Mount Holly employees who attended Monday’s board meeting. “I hope your management team will accept this offer. ... It’s a doggone good offer.”

Bless had said he would be willing to extend the current deal to continue negotiations, but later added that such an extension would occur only if Santee Cooper needed more time to hammer out details of his company’s proposal.

Century also has proposed reducing production at the Mount Holly plant, shutting down one of its two pot lines to cut its out-of-state electricity needs — and the transmission capacity Santee Cooper dedicates to the company — in half. While such a move would cost hundreds of jobs, Bless said the cutback might allow Century and Santee Cooper to come to terms on a new deal that would eventually bring the plant back to full production.

Santee Cooper spokeswoman Mollie Gore said that proposal also has been rejected because it would force a rate increase for the utility’s other industrial customers.

Bless said his company’s agreement with the out-of-state power providers expires Dec. 11 and Mount Holly would start disassembling the plant three days later.

Monday’s board meeting started with hopes that an agreement could be reached, but ended with a somber tone once the board voted to reject Century’s offer.

“You’re going to shut it down, aren’t you? That’s what you’re going to do,” Dennis Gregory, Mount Holly’s plant manager, told Carter after the meeting ended.

“If we do what we’re being asked to do, it will clearly raise other people’s power costs,” Carter responded. “What do you say to people when we give you $130 million over 3½ years? What do you say? It’s not enough?”

“No, it’s not,” Gregory said.

Valerie Taylor, who works in the metals lab at Mount Holly, said she is “very much concerned about my job.” A single mother with five children, Taylor has worked at the smelter since 2010 and said “this company has allowed me to be the independent woman I am today.”

Taylor said she doesn’t know what she will do if the smelter closes. “I’ve never applied for unemployment benefits in my life,” she said. “I’m 46 (years old) and I’ve always been employed. I don’t know what steps I would have to take.”

Carter said Mount Holly’s workers “are great friends to have in the community,” adding that Monday’s decision is one of the hardest he’s made in 33 years with the utility.

The impact of Mount Holly’s closure will be felt far beyond the smelter’s hundreds of workers and $50 million annual payroll, a University of South Carolina study shows. The plant has a nearly $1 billion annual economic impact on the Charleston region, according to the study, and its employees are among the region’s leaders in charitable giving to agencies such as the Trident United Way.

The U.S. aluminum industry has been battered recently by cheap exports from China, a country that regularly subsidizes its money-losing smelters. Aluminum prices are among their lowest since the Great Recession and Bless and other industry leaders are calling on President Obama to take action against what they term China’s illegal exports.

Last week, New York officials took action to keep Alcoa’s Messena West smelter open, offering nearly $70 million in power subsidies and other aid. Mount Holly workers said they don’t understand why South Carolina politicians don’t follow suit. Gov. Nikki Haley told The Post and Courier that state officials have done everything they can to keep Mount Holly open.

“If I was the governor, I would pride myself on knowing that I have the best-running aluminum facility in my state,” A.J. Nelson, Mount Holly’s safety coordinator, said last week. “Why not pride yourself on trying to keep the last-built U.S. smelter — and the most modern and productive — running.”

Bless on Monday urged the South Carolina workers to stay focused on their safety even during the uncertainty.

“The first thing you absolutely have to do is stop and think about how you’re going to keep yourself and your colleagues safe, because it is so easy to forget about that in times of stress,” he said. “There is no more stressful time than thinking it’s more likely than not at this point that you’re going to lose your job sometime between the middle of December and New Year’s Eve — the tragedy of all this.”

Santee Cooper’s board met by phone behind closed doors for about an hour Monday to discuss Century’s proposal. Barry Wynn, a board member from Spartanburg, made the motion to decline Century’s offer and David Singleton of Myrtle Beach seconded the motion. The vote was unanimous, including board member Peggy Pinnell of Berkeley County, where the smelter is located.

“I was very optimistic,” Taylor said of her mood before Monday’s meeting, which changed after the vote was announced. “I thought we could come together and reach some kind of common ground. So it’s really saddened me right now. I didn’t have this in mind today.”

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