Alcoa Plant To Close Without Lower Power Rate

Aluminum smelting plant in South Carolina consumes $4 million a week in power and will close at a loss of more than 600 jobs if it can't negotiate a lower rate.

GOOSE CREEK, S.C. (AP) -- Alcoa officials say the company's aluminum smelting plant in this Charleston suburb consumes $4 million a week in power and will close at a loss of more than 600 jobs if they can't negotiate a lower rate with Santee Cooper, South Carolina's state-owned electric utility.

"The big challenge for us to go forward is the power problem," plant manager Mike Rousseau told reporters who toured the plant Wednesday. "With the economy the way it is, we have to solve this."

The company and the utility have been negotiating for months and Santee Cooper said it's seeking an answer that addresses both Alcoa's concerns and rising costs for the utility.

"We're certainly optimistic we'll find a workable solution," said Laura Varn, the utility's vice president of corporate communications.

Alcoa on Wednesday released two studies, one by local economists and one by researchers form Clemson University, showing the plant -- the last aluminum smelting plant built in the United States -- has an economic impact of $912 million statewide.

The plant, jointly owned by Alcoa and Century Aluminum and which began operation in 1980, operates around the clock and has never laid off a worker in that time. The plant has 560 Alcoa employees and 80 contract workers. The average wage with benefits is $91,000.

Rousseau said that without a favorable power agreement with Santee Cooper, the plant will shut down, as have four others in the United States since the beginning of the Great Recession. He said the issue in those closings has also been power costs.

There are only nine aluminum smelting plants left in operation in the United States, compared to 33 the year after the Goose Creek plant opened.

Alcoa has been negotiating with Santee Cooper for months and talks continue. Its current contract expires in 2015 and it must tell the utility by June of 2012 whether it plans to renew.

"I wouldn't be standing up here and going through this if I didn't think this thing was solvable," said Rousseau, who added the company would like a 10- or 20-year contract. "We have a huge delta between where we are and what it's going to take to continue on a long-term basis."

Electricity comprises about 41 percent of the plant's operating costs. At other aluminum plants that cost is between 30 and 33 percent, he said, adding the plant's electric costs are the highest of any aluminum smelter in the nation.

He would not say how much the $4 million weekly bill needs to be lower, but hoped an agreement can be reached.

Santee Cooper said the utility also has its cost issues as it seeks a solution.

"We are facing some increased pressures and rising costs and uncertainties and impacts in our business as well," Varn told The Associated Press. "We have rising fuel costs and some increases in transportation charges along with EPA regulations which all translate into higher costs that get passed along to our customers."

Workers said a solution was critical to keeping the plant and its hundreds of jobs.

"It's very important an agreement is reached because my future depends on it," said Sonya Watson, who has worked at the plant for seven years.

"It's a good place to work," agreed James Capers, who has worked at the plant since it opened. "I want to keep the plant working for the younger generation."

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