August 16, 2000

Aluminum industry threatened in Northwest

THE DALLES, Ore. (AP) -- Leaders of the aluminum industry are searching for a solution to the crisis facing Northwest aluminum smelters.

Four out of ten aluminum smelters have been forced to close potlines and make cutbacks because of the soaring cost of wholesale power.

An 18-member study team is dissecting the aluminum economy -- including regional and state demand and the effects of rising electricity costs -- for the Bonneville Power Administration.

Another group, Direct Service Industries, is sponsoring a study that will be completed in two to three weeks.

Under new regulations, aluminum plants can buy half of the power they need from BPA. The rest of the power must come from the market, resulting in a power cost of over 30 mills per kilowatt-hour, said Steve Waddington of Reynolds Metals.

"That will put our industry in peril because the Northwest plants will be the highest-cost production in the world," he said.

Ten regional plants provide 9,000 jobs and are critical to the towns they are in, he said.

Power costs are increasing for aluminum smelters while the price of the final product isn't going up, said Brett Wilcox, chief executive officer of Goldendale and Northwest Aluminum plants in Wasco and Klickitat counties.

"We have a serious problem related to power costs," Wilcox said. "The commodity price won't increase because our power price goes up."

Pete Forsyth of Kaiser Aluminum said there are 150 aluminum smelters in the world. In some developing countries, smelters are able to buy power for eight to nine mills per kwh.

He estimated the average price worldwide to be about 18-19 mills.

In some areas, unemployment from aluminum plant closures would jump from 10.8 percent to 30.3 percent, said Dwight Langer, manager of Northern Wasco County PUD.

http://www.djc.com/news/business/11112795.html

-- Martin Thompson (mthom1927@aol.com), August 17, 2000