Ohio governor blames weak global aluminum market for Ormet bankruptcy
Louisville, Kentucky (Platts)--14Oct2013/357 pm EDT/1957 GMT
Ohio Governor John Kasich suggested Monday that bankrupt Ormet Corp.'s troubles are tied mainly to the weak global aluminum market, and that the state has provided more than its share of financial aid to the embattled US aluminum producer.
Kasich, a first-term Republican, did not respond specifically to pleas by the United Steelworkers union last week that he personally intervene in a last-ditch effort to save Ormet and its 260,000 mt/year Hannibal smelter. All six potlines at the smelter in southeastern Ohio are now idled in the wake of the Ohio Public Utilities Commission's October 3 decision to approve only a portion of the electricity rate relief sought by Ormet.
"Ohio wants to see Ormet succeed and has provided more than $300 million in support to the company," Kasich said in a statement released by his press secretary, Rob Nichols. But, "the state of the aluminum market means that not even that huge subsidy has been enough."
Article continues below...
Request a free trial of Metals Daily - now available on Platts Market Center
Platts Metals Daily is available to all subscribers online on Platts Market Center, an interactive website that carries all of the Platts news, market commentaries, proprietary price assessments and archived content, as well as the daily PDF publication.
Platts Metals Daily offers prices, news and analysis for the aluminum, copper and molybdenum value chains. It contains hundreds of metals prices across base, minor, light and precious metals assessed by editors globally. This detailed service will help you monitor global events and quickly spot opportunities or potential pitfalls as well as bring you aluminum and copper price and news coverage. Daily prices and news for molybdenum are also covered to deliver critical insights.
The PUC lowered Ormet's power costs to $50/MWh, less than the $57.99/MWh it has been paying to American Electric Power, but still more than the $45.99/MWh Ormet said it needed to keep Hannibal in partial operation for the remainder of 2013.
The commission also rejected Ormet's request to extricate itself from a longstanding power purchase arrangement with AEP and start buying power on the wholesale power market starting in January 2014. AEP opposed the request.
With Hannibal essentially shut down, except for about a dozen maintenance workers, Kasich's focus now has turned to securing unemployment and other benefits for the nearly 1,000 laid-off workers at the smelter.
According to Kasich, meetings have been held with local leaders "to start getting workers and their families the help they need, and that work will continue because we're committed to seeing this through."
Ormet has said the PUC's refusal to grant the requested rate relief means the company will not be able to emerge from Chapter 11 reorganization. Ormet filed for bankruptcy on February 25 in Delaware.
In a bankruptcy court filing last week, Ormet affirmed that Smelter Acquisition LLC, a portfolio company owned by Minnesota's Wayzata Investment Partners, will not waive conditions it imposed earlier this year before taking Ormet out of bankruptcy.
Wayzata, a private investment firm, and Smelter Acquisition have insisted on acceptable rate relief for Hannibal before moving forward with a $282 million purchase of Ormet approved June 4 by US Bankruptcy Judge Mary Walrath.
--Bob Matyi, firstname.lastname@example.org
--Edited by Derek Sands, email@example.com