Columbia Falls Aluminum cuts output, cites pricey power

NEW YORK, Sept 22 (Reuters) - Columbia Falls Aluminum Co., a primary aluminum producer based in Montana, said it was immediately closing one of five production lines at its 168,000 tonne-per-year smelter due to escalating power costs in the northwestern United States.

``The closure of the potline will begin immediately,'' said a statement issued by the company late Thursday.

Columbia's annual aluminum output will be cut by 33,000 tonnes, coming on the heels of a series of production cuts across the U.S. aluminum industry.

Power costs at smelters have risen due to sales of Northwest-produced electricity to California and southwestern states. Hot weather in these areas led to increased air conditioning loads at power producers, which then charged higher prices.

Electricity prices in the Northwest shot up to highs around $210 per megawatt hour earlier this week, up from about $30 per megawatt hour in May.

Historically, contract prices equalled $23 per megawatt hour, compared to a world average for the aluminum industry of about $18.50 per megawatt hour.

Over the weekend, Vancouver, Wash.-based producer Vanalco Inc. shut the last of five potlines at its 115,000 tonne-per-year smelter, effectively mothballing its production, while it negotiates cheaper electricity rates, industry sources said.

U.S. producers including Kaiser Aluminum Corp. , Alcoa , and Ormet Corp. announced plans for curtailed output at operations in Washington, Oregon, Ohio and West Virginia this summer because of the spike in power prices.

In May 1999, Columbia Falls Aluminum was sold to Glencore AG under undisclosed terms.