Tuesday, November 30, 2021

Whatcom County Aluminum Smelter May Take New Ownership and Reopen

Watcom’s closed aluminum smelter could be revived or given a new lease of life as a steel mill.

Two separate groups are considering the purchase of Alcoa Intalco Works’ Ferndale plant, Bellingham Port officials said Tuesday during a public meeting.

The first proposal involves the acquisition by the company of Alcoa and the reopening of the aluminum smelter for its own needs. The second proposal concerns another company, a Canadian-American joint venture, to acquire the business and transform it into a steel mill.

“We are very supportive of the potential for good, high-paying manufacturing jobs in the area,” said Don Goldberg, director of economic development at Port Bellingham, in an interview. Goldberg said the port is not actively involved in any negotiations, but was aware of the discussions given its role as an economic development agency for the region.

The port authorities did not disclose potential buyers. But Goldberg said he believed both proposals were “quite real,” and he believes the companies would like to move “as soon as possible.” Ultimately, the decision rests with Pittsburgh-based Alcoa, the industrial metals producer that owns the venture.

“[N]o decisions have been made regarding a possible restart or sale, ”an Alcoa spokesman said in a statement. “We continue to evaluate all of our options …”

Goldberg said the second proposal for the conversion to a steel plant involves a phased approach to starting a plant. Phase 1 will create 100 jobs, Phase 2 will invest $ 1 billion and create up to 700 jobs, and Phase 3 will invest $ 3 billion, bringing the total number of jobs to over 1,000.

“From what [the buyers] tell us they would like to do it ASAP, ”Goldberg said. But he noted that converting the smelter to a steel plant would be a significant undertaking, which includes licensing, permits and construction. Restarting aluminum smelters can itself be a long and costly process.

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The plant was closed in 2020 and 700 workers were laid off. When it opened, Alcoa’s plant continually struggled to remain economically viable given outdated, inefficient equipment and rising electricity costs, said Ken Bell, president of the Bellingham Port Commission. He managed to stay in working order with regular negotiations with the authorities. But the rise in aluminum prices in 2020, when the pandemic began, did not help.

Today, aluminum costs over $ 3,000, roughly double what it was when the plant was closed. A global supply crisis could promise to keep markets like this for a while.

Bell said one of the port’s priorities is to ensure sustainability is taken into account during any potential transfer of ownership.

“Any industrial site built in the 50s, 60s and 70s has environmental problems,” he said.

To that end, the joint venture proposal aims to build “the world’s greenest and most modern steel mill,” Goldberg said. The facility will seek to buy scrap metal from America and use electric furnaces and sustainably produced green hydrogen instead of fossil fuels to make steel, becoming more competitive with producers in Asia.

According to Bell, the port did not rule out that at some stage it will need to be involved in the process. He noted that the Port of Bellingham has converted a former Georgia Pacific pulp and paper mill site into Bellingham’s central waterfront. But it took significant environmental cleanup, and it took decades.

“We want to be sure to share our experience and help this deal with those who come to make sure this happens,” he said.

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