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Aluminium smelting at Noranda in New Madrid, Mo

A worker skims impurities from the top of a molten container of aluminum at the Noranda aluminum smelting plant in New Madrid, Mo. on Thursday, May 1, 2014. Photo By David Carson, dcarson@post-dispatch.com

Noranda Aluminum plans to lay off more than half of the 850 employees at its New Madrid, Mo., smelter and will shut the factory down altogether unless it can win an even lower electricity rate from Ameren Missouri.

The warning comes after an electricity outage last week that shut down two of the company’s three aluminum smelting lines. Instead of proceeding with an expensive restart of the production lines, Noranda said Wednesday it would cut 350 jobs by Feb. 4. Those cuts would be in addition to about 140 workers laid off at the smelter Wednesday.

Noranda, based in Franklin, Tenn., has long been a stable source of industrial employment in the economically depressed Bootheel region, providing hundreds of high-paying union jobs. But like all aluminum producers, it’s struggled to cope with a long period of low prices for the metal. Aluminum prices on the London Metals Exchange fell nearly 20 percent in 2015 to near 6½ year lows, and Alcoa last week announced the closure of the country’s largest aluminum smelter, situated in Evansville, Ind.

Beyond the layoffs, Noranda indicated the whole smelter could be at risk. It said Wednesday it planned to curtail the smelter’s remaining operations by March 12 “unless the company is able to secure a substantially more sustainable power rate for the smelter and materially improve the company’s overall liquidity.”

Noranda’s electricity-hungry aluminum smelter is St. Louis utility Ameren Missouri’s largest customer, buying about 10 percent of the power Ameren produces. It spent about $168 million on electricity in 2014.

Noranda already spent most of 2014 working to convince state utility regulators to slash the rate it paid Ameren Missouri for electricity. It won last year when the Missouri Public Service Commission gave Noranda a reduced electricity rate over opposition from Ameren.

That saved Noranda an estimated $17 million to $25 million a year, but pushed more of Ameren’s costs onto other customers. The average household pays about $1 a month more because of Noranda’s rate reduction.

Layoffs at the smelter, however, may imperil that rate, which came with a stipulation that Noranda maintain an average of 850 employees there. Noranda spokesman John Parker said the company’s agreement with state regulators contained a “force majeure” clause that Noranda will argue allows it to waive some of the workforce requirements.

The struggling aluminum producer’s effort to stay afloat appears likely to play out during the Missouri legislative session this year. Parker confirmed that the company was “working on a legislative solution” to lower its electric rates.

Noranda commands strong support among some lawmakers in Jefferson City, and it has clashed with Ameren over legislation consumer and industrial groups worried would lead to higher electric rates.

Ameren didn’t signal outright opposition to further electric rate cuts for Noranda. In a statement, Ameren said it knew the smelter’s employees are important to the Bootheel region.

“Ameren Missouri historically has been and continues to be committed to finding a path forward for Noranda and all of our other customers,” the utility said in a statement.

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