Gus and all,
If any of the DD companies still have plants of any size in the West, the aluminum industry can show them how to make money:
businessweek.com@@s8*xAWUQy03y3ggA/premium/01_09...
How Tinmen Smelt a Quick Profit
What`s more profitable than selling aluminum? Selling the electricity you would normally use to make it--to California. That`s what aluminum producers along the Northwest`s Columbia River have figured out. They`re buying electricity to run their plants from the regional power authority for $22 per kilowatt hour, then shutting down assembly lines, idling workers--and reselling the electricity for $405 per kwh.
The power authority, understandably, wants the companies--Kaiser Aluminum, Columbia Falls Aluminum, and Golden Northwest--to give back a quarter of their windfall--worth up to $1 billion for the next seven months of the current contract. But while the others agree, Kaiser says no and is pocketing the $383 difference. Complains a Bonneville Power Administration spokesman: ``They are taking advantage of the power crisis.``
But Kaiser defends its actions, saying it`s merely exercising contractual rights to resell power. While it shut down two smelters, Kaiser still managed to pay 1,000 idled workers 75% to 100% of their wages. The plants are to remain closed for the contract`s duration. Without the windfall, the Houston-based aluminum maker would have lost 19 cents a share in the fourth quarter. But thanks to the deft arbitrage, Kaiser eked out a 14 cents-a-share profit. ``It didn`t make sense to make aluminum,`` says a Kaiser spokesman.
With aluminum selling for 70 cents to 75 cents a pound and the power to make a pound of aluminum costing $1.50, he`s got a point.
By Stanley Holmes |
