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THE TOP STORIES OF 2013: Ormet Plant May Be Finished

December 29, 2013
By CASEY JUNKINS Staff Writer , The Intelligencer / Wheeling News-Register

HANNIBAL - It will be a cold winter at the once blistering Ormet Corp. aluminum smelter, after the Public Utilities Commission of Ohio failed to lower Ormet's American Electric Power costs from $60 to $45.89 per megawatt-hour as Ormet requested.

Though members of United Steelworkers Local No. 5724 at Ormet pressed Ohio Gov. John Kasich to assist with a restart of the plant that has been sitting quiet since early October, U.S. Bankruptcy Court records show that Ormet's Burnside, La. alumina refinery will be sold to Almatis Inc.

Documents also show Ormet has permission to sell alumina to Switzerland-based Trafigura for $281 per metric ton.

Article Photos

Photo by Casey Junkins
The Ormet Corp. aluminum plant in Hannibal sits quiet, just as it has since Oct. 4 when the Public Utilities Commission of Ohio failed to lower Ormet’s American Electric Power costs from $60 to $45.89 per megawatt-hour as Ormet requested.

Also, Libertas Copper of Leetsdale, Pa. has offered to pay $7.6 million, or about $3.25 per pound, for 2.47 million pounds of new and used copper rods from Ormet, according to court records.

As Ormet sits quiet, the story is the same for the once bustling Wheeling-Pittsburgh Steel plants in Mingo Junction, Yorkville and Martins Ferry - while demolition of the old Steubenville plant has been ongoing. While they were owned by RG Steel, these facilities were purchased by multiple buyers out of bankruptcy in summer 2012. Since then, little if anything has happened at the former mills.

Ormet

Ormet retirees, displaced workers and family members headed to Columbus this month to present 9,000 petition signatures to Kasich, urging him to intervene to help get the closed aluminum smelter up and running again.

"The worst part of it is that this can be done. You would help the economy by keeping these people working," said Tom Byers, president of USW Local No. 5724, who also organized a toy and food drive to help out of work families have some holiday cheer.

"Our guys would much rather work than take handouts," he added.

Amid low aluminum prices and escalating AEP costs, Ormet filed for bankruptcy in early 2013. Far from the first time the company has filed for bankruptcy since it opened in 1958, many workers assumed the aluminum producer would emerge from the situation. Hopes were raised during the summer when CEO Mike Tanchuk announced that Minnesota-based Wayzata Investment Partners wanted to purchase Ormet for $221 million. Ormet even planned to become self-sufficient by developing a system to generate its own electricity from locally drawn Marcellus and Utica shale natural gas.

Despite the optimism, Tanchuk emphasized Ormet needed an electricity rate break from the PUCO so that it could complete the sale to Wayzata. In August and September, hearings at the PUCO office in Columbus allowed Ormet officials to state the case for why they should receive AEP rate relieve. However, the PUCO made its ruling in early October, leading Tanchuk to announce that Ormet would suspend all operations and begin shuttering the plant just a few days later.

"These jobs support families and sustain communities, and Ohio desperately needs more of them not fewer," USW District 1 Director David McCall said. "We simply cannot afford to allow AEP to drive Ormet out of business."

Since the shutdown, laid-off workers have rallied in an effort to convince Kasich to intervene, but Nichols said the governor has no direct authority over the PUCO.

"We continue to work closely with Ormet management, the steelworkers and the local community to figure out how to get Ormet reopened and people back to work. We just met with the steelworkers recently and have had follow-up phone call conversations. It's always good to see them," Rob Nichols, Kasich's press secretary, said.

Also recently, AEP wanted to shut off all electricity to the Hannibal plant because of Ormet's inability to pay its bills, but the PUCO ordered AEP to keep the lights on during Ormet's bankruptcy proceedings. Officials with the U.S. Environmental Protection agency have been concerned that shutting off all power to the facility would release harmful chemicals such as cyanide and arsenic into the Ohio groundwater because an electric pump must continue running to prevent the pollution.

Last week, Libertas Copper paid about $3 million for 430 metric tons of copper rods from Ormet, court records show. The company also sold alumina, which becomes aluminum through the smelting process, to Switzerland-based Trafigura for $281 per metric ton.

Byers said some displaced employees continue to take advantage of the services offered by the Monroe County Job & Family Services office in Woodsfield, where workers covered under the federal Worker Adjustment and Retraining Notification Act notice can receive new job training. For example, the agency can pay for someone to train to receive a commercial driver's license to become a truck driver, or pay for someone to become a certified welder.

Wheeling-Pitt

The massive Mingo Junction plant, idled since 2009, was purchased by Buffalo, N.Y.-based Frontier Industrial Corp. for $20 million in summer 2012. It remains to be seen if Frontier can to get part of the plant going again, or will decide to completely demolish it. Demolition of the ore bridge earlier this year led steelworkers to realize the facility's blast furnace did not seem to be part of its future.

"We removed the old ore bridge. None of the folks we have been talking to plan to use the blast furnace," Craig Slater, general counsel and vice president of Frontier Industrial, said.

Walking near the huge but quiet Mingo mill conjures memories of when the site flourished with activity. This is not the case now, however, as there is an eerie feeling of desolation near the facility. Just up the road from the Mingo plant, most of the former Steubenville plant is gone. Wheeling-based Herman Strauss Inc. purchased the shuttered Steubenville facility for about $15 million in 2012, including $4.3 million for the 103 acres of land and $10.7 million for the metal.

Down the road in Yorkville, steelworkers had hoped to return to work this year after Esmark Inc. bought the RG plant for $4.7 million out of the RG bankruptcy, renaming it the Ohio Cold Rolling Co. However, Esmark promptly allowed natural gas service to be shut off at the mill, leaving USW 1223 President Jerry Conners to say, "I have a hard time believing the plant is on track for a reopening."

Late in 2012, USW members voted 194-24 to accept Esmark's contract offer in hopes of getting back to work early this year. After that, however, Esmark never got anything going in Yorkville. Initially, Esmark officials blamed the "fiscal cliff" negotiations that took place between Democrats and Republicans in Washington, D.C., in late 2012 as one of the reasons they would be delayed in restarting the Yorkville mill.

Finally, the Martins Ferry facility also sits quiet after its $2 million purchase by Wheeling businessman Quay Mull and accountant Joseph N. Gompers. Both Mull and Gompers have been unavailable for comment regarding their plans for the property.

 
 

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