The Century Aluminum smelting company has released information stating that the Mount Holly plant will continue to operate but only at half capacity. This provides a lifeline for those still employed at the plant, allowing them to maintain their jobs until further decisions in regards to the plant are made.
The agreement in question was made between Century Aluminum and the Santee Cooper electricity supplier and it will remain in effect for three years, with the latter supplying the smelting plant with electricity at lower prices. This deal was made mainly due to the fact that Century wanted to shut down the plant because of its increased functioning cost, the price of electrical power from Santee being too high.
Being the only utility provider in the region, Santee Cooper took the option of raising their prices, even though that might mean that some companies may not be able to afford their services. This move forced Century to fire 300 people from their Mount Holly plant, even if, when the plant is at full capacity, it provides nearly $1 billion in state revenue.
The main goal of this agreement is to let the factory function, even if at half of its full capacity, until Century finds another utility provider from the US market. By allowing this freedom of choice, with the added benefit of having a safety net provided by the government keeping input costs low, more industrial customers will be able to function for an extended period of time.
If this becomes a common trend in the market, the US industry will maintain its pace in the current market, even when faced with the Chinese industry. In China, the government protects its industry through rather aggressive means from occurrences such as the one between Century and Santee Cooper, constantly regulating taxes and utility costs.
But this type of legislature brings along with it some risks as well. If the government chooses to cut down costs for industrial customers, the general public may come under fire, with utility providers boosting rates in order to maintain their billion dollar annual revenue. Electricity provider Santee fears that by lowering costs for Century, their other customers may come to the conclusion that the prices aimed towards them are unfair, thus ruining the economic balance.
The goal of improving South Carolina’s economy remains in full focus for Santee Cooper. This is the reason why it agreed with Century Aluminum, even if only for half of its electrical input. By keeping half of the employees as well, the state won’t suffer from a sudden increase in unemployment.
Because Mount Holly plant will continue to operate but only at half capacity, the smelting plant will still have a fighting chance, postponing the threat of shutting down. Giving the Legislature time to figure out a solution for the current problem, be it allowing industrial customers a higher degree of freedom when choosing utility companies or forceful lowering of prices, Century will maintain its foothold in the economic market. A possible outcome will most likely surface in the early months of 2016.