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Snohomish County business
Aluminum market could foil Port's dome

By Jane Hodges
Times Snohomish County bureau

DEAN RUTZ / THE SEATTLE TIMES, 2003 The industrial dome, right foreground, at the Port of Everett is in danger of losing its only tenant.

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EVERETT — Columbia Falls Aluminum has imported raw alumina ore through the Port of Everett for more than 35 years, storing the sandy powder in a waterfront industrial dome for eventual transport to its Montana smelters.

But if market conditions don't improve for domestic aluminum producers, the dome could vanish.

The Columbia Falls smelter, owned by Swiss company Glencore International, had a June 30 deadline to decide whether to terminate its lease or renew for five years. Rather than do either, the plant asked the Port for a temporary lease extension until Dec. 31 while it evaluates the aluminum market. The Port Commission approved the request last week.

Ed Paskovskis, the Port's deputy director, said the short-term lease — at $41,000 a month — will give company managers time to watch for improvements. However, he noted that this is the fourth such extension the Port has granted the company, which has leased the dome since 1968. He acknowledges the short-term leases are a sign of tenuous times in the aluminum industry.

"That business has certainly been challenged," Paskovskis said.

Steve Knight, a plant manager at Columbia Falls, said in a faxed note that he could not comment on why the company was opting for a short-term lease or how market conditions had affected the plant's financial condition.

However, it's well known that the aluminum industry in the U.S. has been hard-hit.

Many U.S. aluminum smelters have begun grappling with difficult market conditions due to ore prices. The trouble has been compounded in the Northwest, home to many smelters, because of higher power prices set by the Bonneville Power Administration.
 
Patrick Kelly, a spokesman for the Aluminum Association in Washington, D.C., said aluminum production throughout the United States slowed in 2001 for a variety of reasons, including high power rates and cheaper production options in Russia and China, which surpassed the U.S. in aluminum production that year. The market hasn't recovered, he said.

"The Northwest was the hardest hit of all, mainly because of power rates," Kelly said.

Between 2001 and 2003, several smelters in Washington, Oregon and Montana closed, laid off workers or began working below capacity. In 2003, Columbia Falls laid off more than 175 workers, and Montana politicians secured federal grants to help them be retrained and seek new jobs. Golden Northwest Aluminum in Goldendale, Klickitat County, also reduced smelter activity and laid off more than 100 workers.

Alumina shipments to the Port reflect the national declines. Columbia Falls once imported as much as 325,000 tons of ore — much of it from Australia — on eight or 10 vessels a year. But alumina tonnage decreased from 318,719 tons in 2000 to 40,093 tons in 2001.

Last week, commissioners said they were concerned about the company's financial position and whether the Port's financial position would be compromised if the company decided to stop leasing the dome. Columbia Falls is the sole tenant for the alumina dome.

Brad Cattle, the Port's legal counsel, said lease terms indicate the Port would be responsible for closure and demolition of the alumina dome if Columbia Falls decided to stop leasing, but those details would have to be examined more closely later.

Port Executive Director John Mohr noted that eventual closure or demolition of the alumina dome would not result in major environmental hazards or challenges for the Port.

The Port built the dome in the late 1960s after it received a request from the Columbia Falls smelter, which has been owned by different holding companies over the years, Paskovskis said.

The dome was jointly financed by the smelter and Port, using bonds that have since been retired. Paskovskis explained that alumina ore is best suited to dome storage to accommodate the way it settles while in storage.

"The odds of finding a replacement for Columbia Falls would not be high," he said.