NEW MADRID, Mo.- Noranda Aluminum’s smelter, located in Missouri’s bootheel, announced today they had finalized $15 million of project-specific financing that will allow it to complete their redraw rod mill on the site of the smelter.
The new rod mill will increase Noranda’s production capacity by approximately 43% and will make the facility one of the most technologically advanced in the North American marketplace. Noranda says that it has already received interest from customers that would purchase the majority of the new rod mill’s capacity.
The company expects the new rod mill to cost approximately $55 million, of which approximately $15 million remained capitalized. Noranda expects production at the mill to begin within a year, with construction jobs beginning in weeks.
“Obtaining financing to complete the rod mill is another positive step for Noranda as we continue to execute our key strategies of optimizing our integrated platform and maximizing our value-added products,” said Layle K. “Kip” Smith, the company’s President and Chief Executive Officer. “The recent ruling by the Missouri Public Service Commission (PSC) to reduce Noranda’s electricity rate for the smelter was a major factor in successfully obtaining financing for the rod mill. The lower rate structure is a key factor that supports the New Madrid smelter’s viability making New Madrid the appropriate venue for the rod mill.”
“The achievement of these and other key initiatives is part of our ongoing CORE (Cost-Out, Reliability and Effectiveness) program which provides Noranda a solid foundation from which to operate sustainably and grow through the aluminum cycle. Despite continued volatility in prices, we believe aluminum’s long-term fundamentals remain positive. As we look forward, we remain focused on achieving operational excellence, making further improvements to our cost structure, and making accretive investments in our integrated platform.”
On April 29th the PSC established a new electricity rate structure during Ameren’s rate case for Noranda’s aluminum smelter in New Madrid. At full production, the new structure is expected to reduce New Madrid’s annual power cost by approximately $17 to $25 million or $0.03 to $0.04 per pound of primary aluminum sold. The lower rate structure became effective on or around June 1, 2015 and carries a term of at least three years.
Lawmakers and local leaders were thrilled to hear of the finalization.
“Noranda is crucially important to Southeast Missouri and specifically the Scott County region,” said Sikeston Regional Chamber of Commerce President Justin Taylor. “Learning that Noranda has obtained the financing to complete their rod mill in conjunction with the lower electricity rates recommended by the Public Service Commission is a key component in ensuring their vitality in the competitive aluminum industry. The Sikeston Regional Chamber is excited about the news and hopeful for Noranda’s sustainability for the future.”
“I’m pleased to see a business like Noranda growing and expanding,” said Rep. Tila Hubrecht (R-Dexter). “I hope to see more businesses grow and expand in Southeast Missouri as well as all of Missouri.”
Rachael Herndon was the editor at The Missouri Times and also produced This Week in Missouri Politics, published Missouri Times Magazine, and co-hosted the #MoLeg podcast. She joined The Missouri Times in 2014, returning to political reporting after working as a campaign and legislative staffer.
Rachael studied at the University of Missouri – Columbia. She lives in Jefferson City with her husband, Brandon, and their two children.