April 29 (Bloomberg) -- Century Aluminum Co., the third-largest U.S. producer of the metal, said it plans to buy Rio Tinto Group’s Sebree smelter in Kentucky for $61 million and agreed to a new power supply accord in the state.
Rio will retain all historical environmental liabilities for the plant and will fully fund the pension plan being assumed by the Century, Monterey, California-based Century said today in a statement. Century, which will also get $71 million in working capital as part of the deal, rose the most in more than a year.
Century said today in a separate statement that it reached an accord with Kenergy Corp. and Big Rivers Electric Corp. to supply power to its Hawesville smelter in Kentucky. Century had said April 16 it would curtail operations at Hawesville unless it secured competitively priced electricity before the Aug. 20 expiration of an existing power contract.
Sebree “was a non-core asset which meant that Rio Tinto wanted out as soon as possible,” said Lloyd O’Carroll, an analyst at Davenport & Co. in Richmond, Virginia.“Both of these smelters are going to be profitable under the new contract.”
Sebree has a production capacity of 205,000 metric tons a year, according to the statement. Hawesville supplies metal to the electrical, defense and aerospace industries, according to its website.
“We believe Sebree, like Hawesville, is globally competitive in every area other than the cost of power,” Century Chief Executive Officer Michael Bless said in the statement about Sebree. “Gaining access to competitive energy is a crucial for the continued viability of these plants, and we hope that the tentative agreement we have reached for Hawesville will be the first step towards obtaining market-priced power.”
Century rose 12 percent to $7.56 in New York, the most since November 2011.
Aluminum for delivery in three months has dropped 11 percent in the past year on the London Metal Exchange. It climbed 1.1 percent to $1,899 a ton in London today.
Century on April 25 reported first-quarter net income of $8.3 million, its first quarterly profit since 2011.
Switzerland’s Glencore International Plc, the world’s largest publicly traded commodities supplier, owns 47 percent of Century, according to a March filing from Century.
Alcoa Inc. and Kaiser Aluminum Corp. are the two biggest producers of the metal by market capitalization.
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