Ormet may shut some aluminum production, cut jobs
Saturday, Aug 01, 2009
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NEW YORK, July 31 - Ormet Corp , an independent U.S. producer of primary aluminum, is deciding whether to cut aluminum production at its Hannibal, Ohio, smelter and the extent to which its employees would be affected, it said in a press release.
The statement confirmed that it sent a Worker Adjustment and Retraining Notification, or WARN, to the 833 hourly and 149 salaried employees at its smelter earlier this week letting them know that there may be production cuts and layoffs, but that it has not yet decided the extent of either.
"At this time no definitive decisions have been made as to the extent of the layoffs. The number of employees that will be affected is, as of yet, undetermined," it said.
Its 266,000 tonnes-per-year smelter has six potlines, only five of which have been running since May 20. It said it was forced to shut some output because of a shortage of alumina.
Raw material bauxite is turned into alumina, which is then smelted into aluminum.
A spokeman at the United Steelworkers union that represents Ormet's hourly workers said conversations this week with company managers suggest they may run two to four potlines.
He said the WARN notice does not require Ormet to lay people off, but they are required by law to issue the notice in case they do need to shut operations.
"In all probability there will be a layoff. I just don't know how much. I don't think they know either," the rep said.
"I don't know if it will be permanent, either. Their letter says 'for an indefinite period.' But they said if the market comes back they plan to run things full out," he added.
A court dispute with Glencore International AG over a contract for the Swiss-based commodities house to supply Ormet with alumina was resolved last week, but aluminum prices remain in steep decline and aluminum demand depressed.
Earlier this week, Ormet issued a press statement about the court ruling with Glencore and said, "Given current aluminum industry conditions, market prices, reduced demand for aluminum, and worldwide economic conditions, Ormet expects that further reductions in its production will be necessary."
In June, Ormet said about 50,000 tonnes of alumina due from Glencore missed the scheduled arrival date, but Glencore accelerated a third-quarter shipment of about 25,000 tonnes.
As a result, the tribunal decided last week that Glencore must pay monetary damages to Ormet.
The court ruled that that tolling agreement with Glencore will formally end once the alumina Ormet has already received is processed into aluminum and paid for at the tolling rate.
Under the tolling deal, all of the aluminum sow produced at the Hannibal smelter is made from alumina supplied by Glencore, for which Ormet receives tolling fees.
Ormet also announced this week that the Public Utilities Commission of Ohio approved a long-term power arrangement between Ormet and American Electric Power-Ohio, effective through 2018, that would provide electric service to Ormet's Hannibal facility at rates below applicable industrial tariff rates when the London Metal Exchange aluminum price falls below a predetermined level.
Ormet is finalizing the arrangement with AEP.
The union representative said the public power deal may depend on Ormet maintaining certain levels of employment.
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