Reuters reported that Century Aluminium Company plans to restart construction at its Helguvik green field smelter project in Iceland and to produce its first metal at the plant by early 2012.
Mr Mike Bless CFO of Century said at the Knight Tumazos Metals and Mining investor conference that "We'll restart construction in earnest in spring 2010."
Mr Bless said that a project of Helguvik's scope would normally take 30 months to get up and running, once construction was underway but, considering work already carried out on the project, the first hot metal should be produced in early 2012. He said that US primary aluminium producer plans to bring smelting capacity online in four 90,000 tonne phases, building up to full operating capacity of 360,000 tonnes with 86 potlines.
Century halted construction on the project during Q4 of 2008 when demand for aluminium and consequently aluminium prices, plummeted at the onset of global economic recession.
Mr Bless said that since then the company has been maintaining minimal work levels at the site so as not to lose the work already begun. By the end of 2009 Century will have spent USD 100 million of the total project cost of USD 600 million. The company is currently mulling options for financing the rest of the project including the possibility of an investor with a minority interest. However, financing was not the biggest worry at the site. Rather, its energy supply presented a bigger potential concern.
He said that once the smelter comes online, production costs at the Icelandic facility should run in the lowest quartile of global smelting capacity but the risk remains that the energy plant will not be built in time.
He added that Helguvik will be the world's only smelter run 100% on geothermal power but the power plant must also be built in stages and be coordinated with the smelter's construction.
Century already operates the Grundartangi smelter in Iceland which Bless said was able to break even when aluminium fell to USD 1,275 per tonne, 7-1/2 year low, in March because of low power costs partly using geothermal energy. He said that the company's overall breakeven level including capital expenditure and maintenance costs runs USD 1,800 per tonne to USD 1,900 per tonne of aluminium depending on input costs.
Mr Bless said that Century sees a pick up in aluminium demand in the medium to longer term horizon the near term price risk was to the downside in light of recent supply restarts in China, Europe and elsewhere amid slow global demand. He said that "We're not chasing the bubble; we're still managing for tough times.”
(Sourced from Reuters)
