Funding to improve Intalco finalized, but can it get a power agreement and reopen?
With $10 million in state funding to make environmental and safety improvements, a power contract is potentially the last hurdle to restarting the Intalco Works aluminum smelter facility in Ferndale.
The state funding remained in the Washington state budget and awaits the governor’s signature after being approved by the legislature.
If the facility is restarted, it could mean around 700 living wage manufacturing jobs, providing a much-needed boost to the region that’s still recovering from the pandemic, a restricted border and flooding. The facility was curtailed in summer 2020.
“This will be the greenest aluminum manufacturer in the world and it will be located right here in Whatcom County, in the United States of America. I think that is something we can be really proud of,” said Alicia Rule, state representative for the 42nd district, in an email.
Whether that becomes a reality is still not clear. Potential operator Blue Wolf Capital Partners LLC is in negotiations with the Bonneville Power Administration over a potential power contract. While talks are ongoing, an agreement has not been reached. Having no agreement in place has union workers and local officials concerned.
“BPA will make or break this project,” said Don Goldberg, director of economic development for the Port of Bellingham, in a telephone interview. He noted that while Blue Wolf could buy power on the open market, it would be too much of a gamble given the volatility of energy prices.
The International Association of Machinists and Aerospace Workers also weighed in, saying in a written statement that BPA restoring its 50-year partnership with the facility is critical not only for adding the manufacturing jobs, but for the national economy and the environment.
“By providing a reliable U.S. supply of green aluminum, it will reduce imports from China, the Middle East and Russia that don’t use clean energy,” the union said in the statement.
BPA is considering Blue Wolf’s request for long-term power service within the limits of the statutes under which the agency operates, said Maryam Habibi, a spokesperson for BPA. The agency has governing statutes that prioritize meeting the existing demand of current customers first.
“As such BPA’s ability to offer surplus power will be at lower quantities and shorter duration than sought by Blue Wolf for its planned operation at the Intalco facility,” Habibi said in an email.
Blue Wolf is not commenting about Intalco while negotiations with BPA are happening, so it is unclear how much power it would need from BPA. In the past, the Intalco facility needed around 400 megawatts of power to run its three potlines.
In past power agreements, Alcoa would agree to lesser amounts of power and either run Intalco at less than full capacity or buy extra power it needed on the spot market. Those power agreements were often contentious, with public utility districts going to court to challenge BPA’s legal authority to provide power to Alcoa. At the time they argued that the public utilities are legally entitled to get preference in the distribution of the region’s limited supply of low-priced Columbia River hydroelectric power, according to The Bellingham Herald’s archive.
That puts BPA under enormous pressure as President Joe Biden talked about the need to bring manufacturing jobs back to the U.S. in the recent State of the Union address, Goldberg said.
“These are exactly the type of jobs we need,” Goldberg said.
BPA is also hearing from legislators at the federal level. U.S. Rep. Rick Larsen sent a letter urging the agency to come to a power agreement.
“A fair long-term energy purchase agreement and investments in energy efficiency will make it possible for the women and men at Intalco Works to have careers that protect national security and make the U.S. a leader in green aluminum,” Larsen said in the letter, dated March 9.
Washington State 42nd District Rep. Sharon Shewmake, who is also a professor of Economics and Energy Policy at Western Washington University, added that along with the jobs and environmental benefits, a restart would help with the current global economic problems that have popped up during the pandemic.
“There have been large benefits to a global supply chain, but one of the costs we have seen is what happens when it breaks. We need more resiliency in the system, which means producing some things at home and that can include aluminum,” Shewmake said in an email.
The price for aluminum is significantly higher than when the Intalco smelter was curtailed almost two years ago. According to the London Metal Exchange, prices are hovering around $3,500 per ton, a level that previously would make the smelter a profitable operation. The price for a ton of aluminum in July 2020 was around $1,600.
This story was originally published March 11, 2022 at 11:36 AM.
