Ormet operations addressed
ST. CLAIRSVILLE – John Puskar, United Steelworkers Staff Representative, visited commissioners during their Wednesday meeting to give an update on the Ormet plant and its hopes for continued operation, a matter of 1,000 Belmont and Monroe County jobs.
On July 7, PUCO informed Ormet that they would not hear their emergency electric case, scheduled for a public hearing Aug. 23.
“They were looking to come out of bankruptcy July 31,” he said, adding that they will not fund the DIP fund past July 31. “That $90 million, when it runs out, it runs out.”
Ormet filed an appeal the following week with PUCO to hear their electric case in emergency session. It is currently before PUCO. Ormet filed with the bankruptcy judge. The case was heard yesterday and the judge granted a motion for one to four of the four remaining lines to be shut down starting Aug. 1.
“If they don’t get a power agreement with AEP by July 31, we’re going to make a decision on how to conserve funds and draw that out,” he said, adding that commissioners can show support by writing to the governor and underlining the importance of saving the company.
He noted that Ormet produces about 271,000 tons of aluminum annually and uses 530 megawatts of power per hour.
“Ormet uses about the same amount of electricity as the city of Pittsburgh,” he said. “That’s their biggest cost, electricity.”
Meanwhile, he said American Electric Power will make close to $1 billion in profit this year. Ormet is a six line operation, reduced to four because of cost.
“Aluminum is a commodity and the price is controlled by the Aluminum Metals Exchange Market,” he said. “And again, 60 percent of the cost to produce a pound of aluminum is electric costs.”
He noted that in February, Ormet ran out of money and declared bankruptcy. Smelter Acquisition, a Wayzata company, has committed to purchase Ormet and invested $30 million, as well as Wells Fargo, which invested $60 million. PUCO provided some short-term relief by deferring two months of electric payments, but requested how Ormet would deal with the electric problem long-term.
For Wayzata to purchase the plant, the asset sale agreement specified certain conditions. The legacy cost and pension must be resolved. The Pension Benefit Guarantee Corp. is taking that over. The steelworkers ratified a new contract and took concessions. Ormet must have a new power agreement with AEP by July 31.
Puskar said that AEP testified that Ormet was its biggest customer and will impact them should the company shut down. Ormet also submitted a long-term solution to PUCO to move their discounts into 2013, allow them to purchase electricity at a reduced rate on the open public market, and are in the process of constructing a gas-fired power plant on their property to supply them with power. If Ormet does not shut down, the plant could be up by 2015.
“Currently there are 144 families that reside in Belmont County that are employed by Ormet,” Puskar said.
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