Kaiser Expects Anglesey Aluminium Smelter to Close

by David Phillips
(AT)

Kaiser Aluminium (NASDAQ:KALU) expects Anglesey Aluminium smelter to close in September, according to its 2009 second quarter statement, despite a generous investment offer of nearly £50 million from the UK Government to help secure an alternative electricity supply in the short term.

Despite extensive discussions between representatives of the joint Boards of Rio Tinto plc, Kaiser Aluminium Corporation and Anglesey Aluminium and Welsh Secretary Peter Hain and other Ministers, it now seems the original decision to close in September will go ahead.

The uncertainty has been very difficult for the local community where 140 people have already taken voluntary redundancy and now it seems that most of remaining 400 workers will also lose their jobs.

Local MP Albert Owen and Unite the Union have been campaigning very hard for the company to continue its commitment to the island.

Unless there is a new twist in this process, the Holyhead smelter site will carry out a much reduced re melt operation which will employ around 80 people.

There is still the question of planning approval for the Anglesey Aluminium Metal 300 MW Biomass Power Plant, which would be located on the exisitng site.

Meanwhile, Kaiser Aluminium Chairman and CEO, Jack Hockema, said market conditions were still challenging and the company expects more destocking by aluminium end users in the short term. Mr Hockema believes, however, that over the long term the fundamentals are positive.

The company's second quarter statement confirms that they see demand for high value added products such as high strength applications in aerospace to remain weak, though they are express cautious optimism on the trend further out.

Kaiser Aluminium reported net income for the half year of $23 m, compared with $62 m for the same period in the previous year. The company does not expect to realise its interest in Anglesey Aluminium, in the form of dividends, in the near future.

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