Reuters reported that US aluminum producer Ormet Corporation has begun to restart its idled alumina refinery in Burnside, La. and expects to be producing the intermediate material for making aluminum metal in the Q4.
Mr Mike Tanchuk president and CEO Ormet said that the Burnside alumina refinery shut since 2006 is expected to ramp up to full capacity of around 540,000 tonnes per year in the Q2 of 2012 matching the needs of its Hannibal, Ohio aluminum smelter. Union workers at the smelter will vote on a revised labor contract on Wednesday and Ohio's Supreme Court unanimously voted to uphold its power contract contested by AEP or American Electric Power Company.
Mr Tanchuk said that "We are restarting as we speak. It will start making product in the beginning of the Q4 2011. Right now we're in the process of doing repairs, improvements and so forth to do that. I anticipate that essentially all of it will be for internal use.”
He said that the Hannibal smelter will produce around 262,000 tonnes of primary aluminum this year and has annual capacity of 270,000 tonnes but will not reach full output until mid February.
Mr Tanchuk said that he expects to produce alumina at the Burnside refinery for much less than the market rate. To assure that Ormet gets the price for its metal needed to be able to restart the refinery it fixed the price of all of the metal it will produce in 2011. Essentially Ormet controls its metal price risk through a hedging program, selling all of its metal to traders who then sell the aluminum to customers.
He said that in 2011, we're 100% pre priced. Meaning we've locked in our price at a good value with traders. So we know what we're getting for our aluminum in 2011. We know what our revenue will be this year. Ormet plans to spend about USD 50 million to get the alumina refinery up and running.
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