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Century Aluminum Company (CENX)
Q3 2010 Earnings Call Transcript
October 26, 2010 5:00 pm ET
Shelly Lair – VP and Treasurer
Logan Kruger – President and CEO
Wayne Hale – EVP and COO
Mike Bless – EVP and CFO
Brett Levy – Jefferies & Company
Mark Liinamaa – Morgan Stanley
John Tumazos – Very Independent Research
Tim Hayes – Davenport & Company
Previous Statements by CENX
» Century Aluminum Company Q2 2010 Earnings Call Transcript
» Century Aluminum Company Q1 2010 Earnings Call Transcript
» Century Aluminum Company Q4 2009 Earnings Call Transcript
» Century Aluminum Q3 2009 Earnings Call Transcript
Thank you, Doug. Good afternoon, everyone, and welcome to the conference call. Before we begin, I would like to remind you that today’s discussion will contain forward-looking statements related to future events and expectations, including our expected future financial performance, results of operations, and financial condition.
These forward-looking statements involve important known and unknown risks and uncertainties, which could cause our actual results to differ materially from those expressed in our forward-looking statements. Please review the forward-looking statement disclosure in today’s slides and press release for a full discussion of these risks and uncertainties. In addition, we have included some non-GAAP financial measures in our discussion. Reconciliation to the most comparable GAAP financial measures can be found in the appendix to today’s presentation and on our website at www.centuryaluminum.com.
I’d now like to introduce Logan Kruger, Century’s President and Chief Executive Officer.
Thanks, Shelly. Thank you for all for joining us today. We had a perfect quarter in an environment of slowly improving market and business conditions. I’d like to make a few brief introductory comments before speaking in more about the market. So let’s turn to slide number four.
We have now working this consistent improvement of the last few quarters in many regions of the world. As I’ll detail in the next few slides, the BRIC countries and other regions in Asia are continuing the lead the way. In the U.S. and Europe, slow growth seems to have settled in with significant disparity in performance amongst end markets.
On the supply side, production coming on stream outside of China and India, during the next few years, if limited generally to a few projects, mostly in the Persian Gulf. Marginal amounted in the developed world continued to be at risk to the aluminum price on a short-term basis, but more importantly, the power price and the availability of power over the long-term.
In China in particular, the supply side environment has become quite interesting. We believe that central authorities are, this time quite serious about reigning in the growth of finding aluminum business. As you know the twin issues of the power costs and the availability on the one hand and the environmental commitments and concerns on the other are driving this besides of behavior.
In addition to limiting future growth, they have targeted inefficient existing capacity for closure and appear to be intense on forcing these actions too. Wayne will make detailed comments about our operations, so I’ll simply hit a few highlights here.
We are very pleased to have a tentative four-year labor agreement at Hawesville. It has been agreed by the Union Leadership and its pending ratification by the membership. This brochure should be concluded in the next few days. The fact that this process took several months to complete is evidence of the many significant issues we believe needed to be addressed.
The contract gives the plants, the foundation from the perspective of labor costs to be competitive for the period of this contract. Wayne will provide detail on other significant work ongoing to increase Hawesville’s long-term competitiveness.
I’d like to take this opportunity to thank the leadership at Hawesville and the entire employee group for the plant’s performance during this period.
The Grundartangi is now continues to perform very well during the extended period of a major repair of one of its transformers. As we reported during the last call, the unit had been repaired and then extends to lead damage when it was shipped back to Iceland. It is now again under repair. Both Wayne and Mike will update the timing and the financial impact of the situation.
I will speak in greater detail about the spaces of the new plant at Helguvik at the conclusion of our remarks. This brochure is taking longer than we would have expected and we continue working towards a restart of major construction.
With that, let’s turn to the next slide number five.
Looking about the market. The LME cash price averaged approximately $2,090 per ton for the third quarter of this year. Prices are running strongly from the $1,925 per ton at the start of the third quarter to the much 2,300 per ton as of today.
Alumina stock prices affirmed from about – to about $360 per ton from about $300 per ton at the end of July. The rising prices for alumina was more pronounced in September on the back of the high aluminum prices.
Global aluminum demand continue to improve in the third quarter with growth in China leading the way. Both India and Brazil have also shown reasonably good growth recently and there has even been the modest pickup in the U.S. and Europe, most notably in Europe as the case is Germany.