Kaiser To Fire Up Idle Potlines At Mead Smelter Stronger Aluminum Market Enables Company To Resume Full Production

The initial steps to bring up two potlines at Kaiser Aluminum Corp.’s Mead smelter began this week, and the plant will be back at full capacity by early 1996.

“I think we got five pots going yesterday,” Bob Irelan, Kaiser’s vice president of public relations, said Thursday.

The two lines have been shut down since early 1993, when electricity shortages in the Pacific Northwest forced the Bonneville Power Administration to cut off 25 percent of the power it supplied Kaiser and other aluminum companies in the region.

That electricity shortage, along with a glut of aluminum on the world metal markets, has kept the potlines cold. They stayed down even during a strong price recovery over the past 18 months.

Many aluminum experts cautiously watched as world inventories remained high, and wondered if the price might crash.

But now, Kaiser officials believe the foundation is set for prolonged market strength.

“There has been a decline in prices recently, but we believe the fundamentals are good and will continue to be good into next year,” Irelan explained.

And even though inventories on the London Metals Exchange have risen modestly in recent weeks, Kaiser officials now believe that the world’s aluminum glut is over and demand will be restored.

“In our view,” Irelan said, “the tone of the market is positive and we want to be in a position to provide metal that we think the market will demand next year.”

Over the past three years, Kaiser has been operating at about 75 percent of its capacity worldwide. That was particularly difficult for a company that has struggled financially in recent years.

A restructuring of debt and other economy measures have restored Kaiser to profitability over the past year, but in a highly cyclical industry, it badly needs to be able to take full advantage of opportunities that arise when times are good.

Kaiser has hired 114 workers in recent months and trained them in anticipation of restarting the two idle potlines at Mead. The plant has eight lines in all, each with a capacity to produce 25,000 metric tons of aluminum annually.

The company had also idled 18,000 tons of capacity at its smelter in Tacoma. Tacoma has already been restored to full production, Irelan said.

Kaiser is among the last of the region’s aluminum smelters to return to full production since Bonneville restored full power availability late in 1994.

One reason for its reluctance to restart the lines was the chaotic condition of the world aluminum market. With the break-up of the Soviet Union, the former Soviet states were dumping tons of aluminum into the world market in 1992 and 1993 that had formerly been used by the Soviet defense industry.

The glut of metal drove down prices to record lows for a prolonged period and many aluminum producers, including Kaiser, struggled to stay afloat.

Prices rose when the Soviets and western aluminum producers reached an informal agreement to curtail production in early 1994. Although company officials will not say so, a part of Kaiser’s reluctance to restart idled capacity may have been due to that agreement.

Labor problems, which resulted in a strike at Kaiser’s U.S. facilities early this year, also may have played a role in the delay.

, DataTimes