BPA Sweetens Power Deal
The Bonneville Power Administration (BPA) has presented a more favorable long-term power agreement to Columbia Falls Aluminum Co. LLC at the urging of Montana's two U.S. senators.
While the draft offer marks an improvement, it might not be enough to warrant a restart.
The new offer, which extends the duration of the proposed deal from two-and-a-half years to an undisclosed longer period, was presented to Columbia Falls earlier this week, a BPA spokesman told AMM.
"We were able to extend the duration of the period that would be covered," he said, noting that the BPA is still hoping to reach a deal.
"The longer term is just one of a number of terms that we're discussing trying to work our way toward an agreement that's based on sound business practices and, ultimately, will result in what we all seem to want?a good agreement that at the end of the day is consistent with our needs and their needs," the BPA spokesman said.
A sustainable long-term power deal is the only factor that stands between the idled smelter and a restart, a source close to the deal said.
Columbia Falls, a wholly owned subsidiary of Zug, Switzerland-based Glencore International AG, operated at a severely curtailed capacity throughout most of 2009 before shuttering its last half of a potline in the fourth quarter (AMM, Oct. 23, 2009).
A Glencore spokesman declined to comment on negotiations at the plant, which has a total capacity of 180,000 tonnes per year.
The BPA and Glencore have been working toward a power agreement since 2008, but previous offers have been too short term to be sufficient, AMM understands.
The new offer, however, is for a significantly longer period of time, suggesting that the BPA and the aluminum company are starting to converge.
The new long-term deal put forward by the BPA this week might have been triggered by a plea from Washington. Sens. Max Baucus and Jon Tester (both D., Mont.), have thrown their weight behind a new power deal, urging BPA administrator Stephen J. Wright to bring negotiations to a close.
"Quickly bringing negotiations with Glencore to a successful close is critical to restarting this plant. I urge you to finalize a contract before the end of the year, so the plant can return to production in the New Year and we can return our economy to its full power," Tester wrote in a Dec. 6 letter to Wright.
The BPA spokesman declined to say whether the senators' involvement sparked the new offer, but he noted that "we absolutely respect the input and guidance that we get from our congressional delegation."
A Columbia Falls spokesman confirmed the senators' support but said the new deal, while encouraging, was only a small step in the right direction.
"I think it's a very good sign that the Montana delegation has taken such a strong interest and that Bonneville is responding," he said. "It hasn't been enough to become viable, but it is a response."
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