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Ferndale Intalco’s smelter to stay open into 2018

Suzi Pickett, pot operator, pours metal Oct. 25, 2013, at Alcoa Intalco Works in Ferndale. On May 2, 2016, Alcoa and the Bonneville Power Administration announced a finalized power agreement that will keep the smelter operating until at least Feb. 24, 2018.
Suzi Pickett, pot operator, pours metal Oct. 25, 2013, at Alcoa Intalco Works in Ferndale. On May 2, 2016, Alcoa and the Bonneville Power Administration announced a finalized power agreement that will keep the smelter operating until at least Feb. 24, 2018. The Bellingham Herald

Alcoa and the Bonneville Power Administration have finalized a power deal amendment to keep the Intalco aluminum smelter operating.

The amendment went through a public comment period with no one coming out against the proposal, which includes allowing Alcoa to purchase more of its energy on the currently less-expensive spot market. Alcoa also would make a $1.5 million cash payment to BPA and would purchase some of BPA’s surplus power. The amendment lasts through Feb. 14, 2018, while the 10-year contract between Alcoa and BPA lasts until September 2022.

In a written statement Monday, May 2, Alcoa said the short-term amendment, combined with $3 million provided by the state for workforce training, are key factors in helping Intalco remain competitive.

I’m really happy about this not just for my family, but for the Ferndale community.

Tasha LeMay, who started Facebook page for Intalco families

Alcoa announced last November plans to curtail the smelter operations at the end of March 2016 to deal with the oversupply of aluminum on the global market, which led to a drop in prices that made running the smelter unprofitable. The curtailment deadline was later extended to the end of June.

If the curtailment had taken place, it would have meant layoffs for 465 workers.

The announcement was met with relief by many of the families who have been waiting months for a resolution. Tasha LeMay, whose husband, Shawn, has worked at Intalco for five years, said she was “over the moon” upon hearing the May 2 announcement. She is pregnant with their third child and the family bought a house in Ferndale about a year ago. The potential curtailment and threat of closures in recent years has been nerve-wracking, but she said the company supplies good family wages and benefits.

“I’m really happy about this not just for my family, but for the Ferndale community,” LeMay said.

When Alcoa was considering curtailing the smelter last November, LeMay started a Facebook page called NW Intalco Families to keep families and the Ferndale community updated on the status of the aluminum smelter. While the social media site was meant to provide information, it also served as a way to for Intalco families and the Ferndale community to organize letter-writing campaigns to legislators. She believes that response was helpful in avoiding the smelter’s curtailment.

In the past few months dozens of workers left the company for early retirement or other jobs, so Intalco is currently hiring to fill those positions. Along with the casthouse, which would have stayed open during the curtailment and employed around 100 people, Intalco currently has around 500 workers. To be fully staffed for the two-and-a-half potlines, Intalco employs around 575 people.

Several legislators expressed approval for the deal, including U.S. Sen. Patty Murray, who said it was great news for Whatcom County

“It’s also a great example of government, industry, and labor working together for the good of an entire community,” Murray said in a statement. “I applaud Alcoa for seeking a solution to keep hundreds of workers on the job, and BPA for its willingness to come to the table and help get this done.”

What remains a concern is the global market condition surrounding the price of aluminum. At the time of the first curtailment announcement in November, global aluminum prices had fallen to under $1,500 a metric ton, according to the London Metal Exchange. Prices bounced up and down in early 2016 but have rebounded of late, rising to $1,672 a metric ton.

With this new amendment, BPA estimates it will receive just under $8.6 million in revenue during the contract term. If Alcoa had moved forward with its curtailment plans, that revenue would have dropped to just under $3.3 million. BPA received 17 comments from local legislators and various agencies and companies, with none objecting to the amendment. BPA also will benefit from having Alcoa purchase some of its surplus power, which normally would be sold on the spot market.

Dave Gallagher: 360-715-2269, @BhamHeraldBiz

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