Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Steve's Channelling Thread -- Ignore unavailable to you. Want to Upgrade?

To: Rich1 who wrote (11743)	2/26/2001 11:16:49 PM
From: Junkyardawg	Read Replies (1) \| Respond to of 30051

You aren` t going to believe this article. I thought I had heard it all until now. businessweek.com@@s8*xAWUQy03y3ggA/premium/01_09/c3721023.htm 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