Noranda to layoff 200 in 6 months

Wednesday, September 3, 2014 ~ Updated 7:06 AM
Noranda Aluminum employees listen as CEO Kip Smith speaks Tuesday during a press conference at the New Madrid Smelter. (Leonna Heuring, Staff)

NEW MADRID -- Noranda Aluminum Inc. announced Tuesday it's laying off up to 200 employees and suspending an expansion project at its New Madrid smelter after state regulators refused to lower its electricity rates.

The cutbacks by Noranda come less than two weeks after the Missouri Public Service Commission denied its request for a roughly 25 percent reduction in electricity rates that it pays to Ameren Missouri.

"It is heartbreaking to me to be forced to take actions that eliminate jobs, but these actions are necessary to help us remain competitive in the near-term," Noranda President and CEO Kip Smith said in prepared remarks for a press conference at its New Madrid aluminum smelter. "The long-term future of this plant depends on our ability to secure an affordable and competitive power rate."

Noranda employs nearly 900 people at the smelter, which it says produces 14 percent of the nation's primary aluminum. Electricity comprises about one-third of its production costs, and the company had sought a $48 million reduction in its annual electricity bill. That would have resulted in higher rates for other customers of Ameren Missouri.

While rejecting the request, Missouri utility regulators said they remained unconvinced that Noranda faced a "liquidity crisis" and that other consumers would be hurt more if Noranda quit getting its electricity from Ameren than if it received a rate cut. The PSC also said that Noranda's request amounted to an "economic development subsidy" that would have been better directed to state legislators.

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Noranda Aluminum CEO Kip Smith speaks Tuesday during a press conference that announced the elimination of 125 to 200 jobs at the New Madrid smelter over the next six months. (Leonna Heuring, Staff)
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