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Smelter's Final Hope Melts

by Pat Forgey
Longview, WA, The Daily News, January 20, 2004

There is no longer even a faint hope that Longview Aluminum's smelter will ever again produce metal, Bill Brandt, the bankruptcy trustee overseeing the case, said Monday.

"It cannot reopen," he said.

With no buyers remaining interested in the plant, Brandt said he told U.S. Bankruptcy Court Judge Eugene Wedoff last week that he'd agreed to let the Bonneville Power Administration disconnect power service to the smelter's potlines.

BPA spokesman Mike Hansen confirmed a tentative agreement with Brandt, but said details had yet to be worked out.

Longview Aluminum, under the leadership of former chairman Michael Lynch, ran up millions of unpaid power bills with the federal power marketing agency. It closed in March 2001 to sell power back to BPA and filed for bankruptcy protection in March 2002.

Lynch said then that the bankruptcy filing was done to avoid losing both the smelter's rights to buy BPA power and its right to use the BPA transmission system to get power to Longview, and the bankruptcy court ordered the power remain on.

Former aluminum workers hoping to see the plant restart have held demonstrations outside the former Reynolds Metals Co. plant hoping to prevent the power from being disconnected, fearing that losing access to the power would make it impossible for the plant to ever restart.

While the plant's union leadership say they've not entirely given up hope, some of the plant's workers say it is time to move on.

"I knew it would never reopen," said Dan Bridges of Rainier, a 30-year aluminum worker, though some union leaders say they won't give up until the plant has been irrevocably damaged.

An initial auction is likely to happen by late March or early April with the sale of trucks and trailers, machine shop tools, electrical equipment and other things that can be easily removed from the plant, said Brandt. Later, the potlines and other more substantial parts of the smelter will be sold, he said. Millions of dollars in raw materials have already been sold.

Two possible buyers who came forward in December decided not to make an offers after studying plant and the industry finances. Brandt said. High electricity costs in the Northwest make operating the smelter impossible, he said, but there were other problems as well.

Power prices
Power prices have diminished since the West Coast power crisis began in 2000, but still remain well above the historically low levels that originally drew the power-intensive aluminum industry to the Northwest. "Power was number one," said Brandt.

Longview Aluminum also has no long-term contract to purchase alumina, the raw material from which aluminum is made. That would force any new operator of the smelter to buy alumina on the open market, likely at prohibitively high prices, Brandt said.

"The alumina contract was a difficult thing to get over," he said. "It became fairly apparent to anybody who began to look at the smelter that you'd need a source of alumina."

While the two potential buyers were studying the smelter in Longview, Golden Northwest Aluminum filed for bankruptcy protection on December 22. That company owns smelters in Goldendale, Wash. and The Dalles, Ore. That highlighted for buyers the difficulty of profitable operation of smelters in the Northwest, said Brandt.

"There are maladies besetting the entire industry in the Northwest that even the most dispassionate observer would have to agree are substantial and legion," he said.

Gaylan Prescott, staff representative of the United Steelworkers of America in Longview, acknowledged chances of salvaging the smelter and the 950 jobs it once provided are increasingly unlikely, but said the union still hoped the plant would restart.

"There's no reason to completely throw in the towel," he said. "There hasn't been any action taken to permanently incapacitate the smelter. The heart of the plant, as I understand it, is fully intact at this point."

The loss of the power and transmission contracts are serious problems, he said, but could be overcome by buying power from the nearby Mirant power plant. That plant was mothballed while partially complete, and its bankrupt owner is looking to sell it.

Longview city manager Ed Ivey said he didn't want to give up hope for that many jobs, but it might be time to instead consider the future of the site.

"I never say never, but it looks like it is much more difficult to product aluminum in the Northwest now than it ever was in the past," he said.

Alcoa, which took over Reynolds Metals in 2000 and sold the smelter to Lynch, and retains ownership of the ground under the plant and responsibility for cleaning up the site, according to its lease with Lynch. Sixty years of aluminum production at the site has left it heavily contaminated, said Brandt.

That means the prime riverfront site could be used to once again boost the local economy, Ivey said.

"I think it's incumbent upon Longview as a community to explore aggressively a partnership in which we could determine what options are open to us, what have others done and what possibilities are out there for us," he said.

Pat Forgey
Smelter's Final Hope Melts
The Daily News, January 20, 2004

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