Kaiser Aluminum Scales Down Production During Plant Reconstruction

HOUSTON-Kaiser Aluminum Corp.’s alumina refinery at Gramercy, LA is back in business on a limited scale while still rebuilding.

A July 1999 explosion had disabled the plant’s digestion area owned by Houston-based Kaiser Aluminum. The facility’s annual capacity prior to the explosion was 1.070 million metric tons. The local management hopes to gradually boost alumina production to 75% of its post-construction capacity of 1.250 million metric tons. Production in 2000 will probably total 40,000 or so metric tons.

Construction of the final phase of the digestion unit is expected to be completed in March 2001. Virtually all of Gramercy’s expected production is covered by sales contracts for the next several years.

“Completion of the project dramatically improves Gramercy’s competitive position,” says Raymond J. Milchovich, Kaiser president and CEO, “and sets the stage for possible expansion at a later date to a capacity of 1.5 million metric tons per year.”

The latest estimate of reconstruction cost has been upgraded to $275 million. That number reflects the addition of added safety features and enhancements to increase capacity for a highly favorable cost-per-ton.

Kaiser has received insurance recoveries of $73 million for capital expenditures. The balance of the $27 million is expected to be collected by the end of 2000 as insurance recoveries are received and construction continues.

“Despite having to fund our share of the Gramercy rebuild, the company has maintained adequate liquidity throughout the project,” says Milchovich.