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In Push to Reopen CFAC, Hesitancy Over Languishing Aluminum Market

By Beacon Staff

With the promise of 300 or so jobs dangling over an economically depressed area, residents in Columbia Falls are patiently waiting to see what happens with contract discussions between the Bonneville Power Administration and Columbia Falls Aluminum Company.

And they will likely continue waiting for some time, at least until aluminum prices improve. In any case, the shuttered CFAC plant will not be opening back up by April 1, the hopeful date outlined in BPA’s contract proposal in August of last year.

Catching spring runoff to help power the facility was part of the motivation for the desired April startup date. Even though that date won’t be met, BPA spokesperson Mike Hansen said discussions are ongoing and the proposal’s original terms are still on the table: an average of 140 megawatts for four-and-a-half years, enough to power two of the plant’s five potlines.

“We would have needed to sign the agreement in December or January to be running by spring runoff,” Hansen said. “But we’ve been continuing to talk with them and work with them even though we haven’t yet finalized the language of the contract. So it’s kind of a wait-and-see situation.”

“And they’re waiting to see what the market looks like,” he added.

The CFAC aluminum plant, which once employed as many as 1,500 people, shut down in October of 2009 when poor market conditions made what was left of operations unviable.

Though some aspects of the proposed power sales agreement are still being hammered out, there have been important advancements in negotiations, both Hansen and former CFAC manager of external affairs Haley Beaudry said.

Most notably, a National Environmental Protection Act analysis is largely complete, a requirement for the agreement. Hansen said BPA has secured a draft record of decision and can finalize the NEPA process once a final sales agreement is reached.

As another aspect of its contract criteria, BPA must complete an equivalent benefits testing process, which determines the net benefits the agreement would have for BPA’s power customers.

Additionally, Hansen said BPA must work out the details of a letter of credit – called a “corporate guarantee” – with CFAC and parent company Glencore International. The guarantee articulates who will be financially responsible for the contract.

“Basically it says if CFAC for some reason wasn’t able to pay, then who would be able to back up this contract?” Hansen said.

Last week, Montana Sen. Max Baucus announced that he had met with BPA Administrator Stephen Wright and pressed him on a timeline for reopening CFAC. The senator’s office says opening the plant will create as many as 350 “good-paying jobs in the Columbia Falls community.”

According to a press release, Baucus asked Wright “to finalize a power contract with CFAC and do everything possible to move forward on a plan to reopen the company.”

“Hundreds of families are waiting in limbo for the jobs that I hope are not being held up by red tape,” Baucus said. “It’s time to reopen Columbia Falls Aluminum Company and bring back hundreds of jobs in the Flathead.”

“Unemployment in Flathead County remains at an unacceptable 10.6 percent,” the senator added. “Direct jobs from finalizing this agreement would lower that number into the single digits. I’m going to keep pressing BPA and Glencore to move forward so we can reopen CFAC.”

Beaudry, who is no longer employed by CFAC but still represents the company in contract discussions, reiterated the poor condition of the current aluminum market as a deterrent for reopening. Also, he said it makes the most sense to open three of the five potlines, rather than only two. That means the power for the third potline would have to come from outside the BPA contract.

If aluminum market conditions improve and an agreement is secured, Beaudry said it would take up to six months to get the plant up and running again.

“It’s been sitting there two-and-half years,” Beaudry said. “Just like anything, it suffers deterioration. So things need to be fixed. I also imagine we would upgrade a few pieces of equipment.”

Carol Pike, executive director of the Columbia Falls Area Chamber of Commerce, said the aluminum plant has been an “economic force” in the community since the 1950s and hopes to see it running again.

“Economic and morale wise, it would be wonderful,” Pike said. “When it’s open there are more dollars to be spent in the Flathead Valley. We have always supported the opening of the aluminum plant.”