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Intalco Aluminum Smelter in Ferndale may Stay Open by Dave Gallagher Bellingham Herald, April 12, 2016

New power agreement could keep smelter open through February 2018

FERNDALE -- Alcoa and the Bonneville Power Administration have reached a new power agreement that will keep the Intalco Works smelter going through Feb. 14, 2018.

The nearly two-year agreement is being proposed with the hope that aluminum prices will stabilize in the coming years, improving the smelter's chances for long-term survival, said state Rep. Luanne Van Werven, R-Lynden, who announced the deal publicly on Tuesday evening, April 12.

The agreement was posted the same day on the BPA website and is not a finalized deal. The agency is taking public comment on the proposal until noon April 22 before a final decision is made.

It is considered a major breakthrough, however, in keeping the smelter going past June 30, when operations were scheduled to be curtailed. A curtailment would mean the loss of 465 jobs.

"It's a great day for Whatcom County," Van Werven said Tuesday evening. "I'm so excited for the Intalco families who worked hard to make this happen."

Since the proposal is going through the public comment period, Alcoa would only acknowledge that officials have had productive conversations with Intalco's power supplier on a short-term energy amendment that could keep Intalco going beyond June 30.

"A decision will be made based on the final amendment presented to Alcoa along with prevailing market conditions," Alcoa said in a written statement sent by spokesman Josh Wilund.

A BPA spokesman could not immediately be reached for comment.

The proposed amendment would allow Intalco enough power to operate 2 and 1/2 potlines, which is the current level of operation.

Union workers had not officially heard of a deal being reached early Tuesday evening, but they suspected something was coming together, said Glenn Farmer, business representative for the International Association of Machinists Local 2379 District 160. He said the proposed deal is great news and gives the facility a chance to continue to compete, given the global market forces at work that drove down aluminum prices last fall.

"I think having Alcoa in the U.S. will be a constant battle," Farmer said. "But this place (Intalco) has a lot of good things going for it."

If an agreement is approved, it would extend the employment of about 465 workers who were scheduled to be laid off at the end of June. Once the smelter operations were curtailed, only the casthouse was scheduled to remain operating, employing about 100 people.

The company is currently hiring temporary workers to replace employees who opted for early retirement or who left to work elsewhere. If this deal is approved, Farmer estimates about 50 positions will need to be filled.

Two key turning points may have stopped the curtailment plans for now. One was savings on operational costs, which postponed the curtailment from the end of March to the end of June. The second was $3 million in funding recently approved in the state budget to train Intalco workers.

"I think that (the $3 million funding) really opened the door for this," Van Werven said, adding that it sent a strong message of support for the Intalco facility.

Alcoa announced back in November that it was curtailing the Intalco smelter operations because there was an oversupply of aluminum on the global market, leading to a drop in prices that made operating the smelter unprofitable. Prices continued to fluctuate in recent weeks but in the past few days have rebounded. According to the London Metal Exchange, the price for a metric ton of aluminum on Tuesday, April 12, was $1,513, up from $1,480 a week earlier.

Aluminum commodity historical prices 1990 to mid 2016

Aluminum is a lightweight, corrosion resistant metal used mainly in aerospace applications, as a construction material, in packaging, automobiles and railroad cars. Resources of bauxites, the raw material for aluminum are only located in seven areas: Western and Central Africa (mostly, Guinea), South America (Brazil, Venezuela, Suriname), the Caribbean (Jamaica), Oceania and Southern Asia (Australia, India), China, the Mediterranean (Greece, Turkey) and the Urals (Russia). Aluminum futures and options contracts provide price transparency to the U.S. aluminum market, valued at about $35 billion per year in products and exports.