Century Aluminum is continuing talks with partner Emirates Global Aluminum about their massive smelter project in Inola, Oklahoma, expected to double U.S. aluminum production, CEO Jesse Gary said on an earnings call Thursday.

The companies are making progress on a power deal and financing details, Gary said, with plans to reach a final investment decision and break ground by the end of the year. “We both remain very excited about the new project and are working hard to make it happen,” he said.

Century Aluminum is also expanding production at its Mt. Holly, South Carolina and Grundartangi, Iceland, locations, to better serve U.S. and European markets as the Iran war disrupts global supplies and capacity.

Century Aluminum is navigating “one of the most dynamic markets” in recent memory, Gary said on the call, driven in part by higher aluminum prices as demand increases for power and data infrastructure buildouts, as well as commercial aviation and defense manufacturing.

He said the company is already seeing increased value-added demand after President Donald Trump signed a proclamation on April 2 that closed valuation loopholes, which allowed importers to ship their products to the U.S. duty-free. Century Aluminum expects the Iran war to create a “go-forward” effect for its products throughout the rest of the year due to supply deficits and expected destocking, Gary added.

Approximately 2.5 million tons of global production in the Middle East have been disrupted by raw material shortages or direct drone and missile attacks, the company estimated. Gary said Century Aluminum has been able to support affected U.S. customers by diverting some of its expansion tons from Mt. Holly to strained supply lines.

“The timing of our Mt. Holly restart could not be better in this regard,” he said.

During the first quarter, Century Aluminum reported $649.2 million in net sales, up $15.5 million from the previous quarter. This increase came primarily from metal price increases, which offset lower shipments.

The Chicago-based company made a net income of $337.5 million, up significantly compared to $1.8 million in the previous quarter. In addition to higher prices, Century Aluminum posted a one-time gain of $287.9 million in the quarter following the sale of an idle smelter in Hawesville, Kentucky, to TeraWulf, a data center operator.

Century Aluminum also highlighted a number of “exceptional” costs totaling $166.8 million, including seasonal charges related to extreme winter weather at Mt. Holly and a hurricane that impacted Jamalco’s operations. The company also noted equipment failures in Iceland, derivative losses and expansion expenses. As a result, it reported an adjusted net income of $170.7 million for the quarter, up $42.5 million sequentially.

Looking ahead, Century Aluminum is expecting adjusted EBITDA to be between $315 and $335 million during the second quarter, driven in part by higher prices and additional capacity.

“We are now moving into a very busy second quarter for the operations team,” Gary said.

After starting the first potlines three weeks ago at Mt. Holly, the smelter is scheduled to be fully operational by the end of June. The expansion should bring the location’s production capacity to 230,000 metric tons annually. Separately, the company restarted its second potline in Iceland last month in an effort to reach full capacity by the end of July.

“In an increasingly complex world, it is imperative that we are able to meet our domestic needs for critical minerals with domestic production,” Gary said.

By: DocMemory
Copyright © 2023 CST, Inc. All Rights Reserved