Kaiser Aluminum will remain idle
SMELTERS: Low prices will delay Tacoma, Spokane site reopenings
September 15, 2001
John K. Wiley; The Associated Press
SPOKANE - Kaiser Aluminum Corp. announced Friday it will keep its smelters in Spokane and Tacoma idle through October and likely longer because of poor prices for its metal.
Kaiser officials earlier had said they wanted to restart the aluminum-making pot lines at smelters in Spokane and Tacoma after new federal power contracts take effect Oct. 1.
The smelters have been idle since last year, when the company concluded it could make more money selling its allocation of federal electricity than by making metal.
"Unfortunately, continued declines in already weak metal prices have forced us to make this decision," Kaiser Chairman and CEO Ray Milchovich said in a release. "After careful analysis ... we have concluded that smelter restarts do not currently make economic sense for Kaiser."
Dan Russell, president of United Steelworkers of America Local 329, said the union learned of the company's decision Thursday. Several dozen workers who were called back in August to get the Mead smelter ready for a possible October restart will be laid off Sunday, he said.
Company officials said a restart is unlikely for at least six months, Russell said.
Kaiser, owned by Maxxam Inc. of Houston, was widely criticized for its decision last year to close the smelters and sell the power that would have been used to run them. The company made more than $400 million from the sales when electricity prices spiked.
Other aluminum companies in the Northwest have struck deals with the Bonneville Power Administration to remain idle in return for cash to pay laid-off workers and offset some other costs.
Kaiser offered to give its load of 251 megawatts - enough to serve more than 150,000 homes - to BPA in exchange for similar payments, but the two agencies have not reached agreement.
"Under the new contract ... they are required to share some of the proceeds of their windfall profits made under the existing contract, and they have failed to do that," BPA spokesman Ed Mosey.
"Kaiser is retaining all the benefits of resale," he said. "It made no sense to pay them again to compensate their workers."
Kaiser spokesman Scott Lamb said Kaiser's union contract calls for the company to pay wages to steelworkers for up to two years, based on seniority.
Lamb said the company is being careful not to speculate when a possible restart would occur.