Noranda Reopens After Hurricane Ida

Smith disagrees with the widespread perception that American manufacturing is on its deathbed, believing there to be a strong demand for aluminum products and that this industry can thrive in America.

Noranda credits its location in both the United States and Jamaica as being key to its success, with over 95% of primary aluminum products sold within a one-day truck delivery radius from their Gramercy plant in Louisiana.

The Gramercy Plant

Noranda Gramercy plant on the Mississippi River between New Orleans and Baton Rouge has resumed operations after being shut down August 29 due to Hurricane Ida’s passing through Louisiana, according to sources close to the company. Bauxite refining and alumina production resumed at approximately 80% capacity this week according to source close to Noranda, with extensive safety checks conducted before increasing output gradually as soon as they can safely do so.

Gramercy Alumina produces alumina for use in manufacturing many different aluminum products used across industries like building and construction, automotive manufacturing, packaging consumer durables and aerospace. With global recovery seen across this sector and increasing demand for many companies’ products such as extrusion billet and foil for aerospace use. Furthermore, transportation requires fin stock.

Bauxite from Jamaican mines provides the raw material for making alumina, which in turn is used to manufacture other aluminum products at plants such as Noranda’s Gramercy plant – purchased in 2004 from Kaiser Aluminum and Chemical Corp and the world’s largest, producing an estimated 11 million metric tons annually of alumina production.

Gramercy Plant’s integrated fabrication facility turns molten metal into various products like extrusion billet and foundry ingot, while currently being expanded and upgraded with additional storage capacity to increase processing capabilities at the plant.

Mine Safety and Health Administration inspectors have visited Gramercy since it was acquired by Noranda; federal court rulings established MESA jurisdiction over their alumina facilities. The plant has been subjected to several violations in recent months. Most recently, 36 additional health and safety citations were levied against it for failing to keep workers up-to-date with equipment training requirements as well as wearing protective clothing when handling caustic substances.

The Upstream Business

Upstream operations at Alcoa include their aluminium smelter near New Madrid and supporting operations at their vertically integrated bauxite mine in St Ann, Jamaica and Gramercy refinery in Louisiana. Together they produce alumina as raw material for producing primary aluminum production.

At Gramercy plant, aluminum production is an intricate process involving multiple stages of smelting, refining and forming which combine to produce primary metal ingots. Additional processing then creates value-added products such as extrusion billet and redraw rod which are sold at premiums over basic commodity grade ingots; these value-added items find applications in stationary air conditioners, transformers and food packaging products.

Noranda has taken steps to take advantage of opportunities in this sector by increasing productivity efforts and implementing a three-year productivity program designed to increase pre-tax profitability by $85 million independent of commodity prices. Furthermore, Noranda invested in efficiency improvements which reduced electricity costs by $20 million.

These investments are helping the company offset the effect of lower aluminum prices on its profit and loss statement, but Smith recognizes they remain challenged by low energy prices and global economic slowdown.

Closing Noranda’s smelter would leave an immeasurable gap in their vertically integrated company structure, according to this expert. As it’s the only place in North America producing both alumina and primary metals, closing would leave competitors free to purchase these goods from Noranda at reduced rates.

Numerous companies have expressed an interest in purchasing the plant and continuing its operations, but Granges – based in Sweden and having acquired Noranda’s upstream business during Chapter 11 bankruptcy reorganization proceedings – is expected to make the final call.

LED, the state’s economic development agency, began working with the alumina plant in May 2015 on business retention efforts to retain operations at this facility. LED offered a comprehensive incentive package including services offered through its top-ranked workforce training program – LED FastStart; performance-based forgivable loan of $1 Million under LED’s Economic Development Award Program and Modernization Tax Credit worth $200,000 annually for five years toward upgrades or equipment purchases for upgrades at their alumina facility.

The Downstream Business

Noranda Aluminum Smelter stands apart from typical aluminum smelters in that its production capabilities extend far beyond producing alum, or commodity grade product known as alumina. Instead, Noranda boasts production capacities which enable it to add alloys and fabricate the metal into various shapes – these value-added products sell at a premium over commodity aluminum products. Furthermore, Noranda owns and operates rolling mills in North Carolina, Tennessee, and Arkansas; together, its upstream and downstream businesses produce 13 percent of primary aluminum consumed in the United States.

Noranda CEO Smith, who assumed leadership after Apollo purchased it from Xstrata in March 2008, describes their strategy as built around three tactical choices. These are integrated, strategically located assets in both the United States and Jamaica that compete globally; productivity-focused operations; and selling every pound produced as value-added product.

Noranda’s upstream business includes two operations located near the mouth of the Mississippi River: Gramercy Alumina Refinery Plant and St Ann Bauxite Mine in Jamaica and Gramercy Alumina Refining Operation located nearby near Gramercy near Gramercy; each year this Alumina travels via barge from this facility to New Madrid Smelter to produce aluminum.

So the company has taken measures to diversify its footprint in order to capture economies of scale and remain profitable regardless of fluctuating commodity prices. Their commitment to sustainable operations is founded in their core values and corporate culture, supported by strong leadership at an executive level.

Noranda has taken active steps to adjust its cost structure in order to enable it to thrive under any market condition, including debottlenecking its flat-rolled product plants and realizing labor savings from reduced global workforce numbers.

Noranda continues to invest in its future. One such investment includes considering a project in Chile for building a 438,000-tonne-capacity aluminum smelter and three hydroelectric power stations for energy. Noranda has also expanded its business across North and South America by purchasing Brunswick Nova Scotia copper/zinc mine and Canadian Hunter Petroleum business, among others.

The Strategy

One century ago, Noranda was one of the largest primary aluminum producers and major employers in Jamaica. Now the company operates a fully integrated production chain from bauxite mining to quality rolled aluminum foil production with an emphasis on safety, growth, sustainability, productivity and cash management. Upstream operations comprise 13 percent of primary aluminum consumed in the US from its St Ann mine through Gramercy Louisiana refinery to New Madrid Missouri primary aluminum smelter while downstream business produces foil and light gauge sheet at rolling mill facilities located across Tennessee, North Carolina and Arkansas production facilities located across Tennessee North Carolina & Arkansas production mill facilities located across Tennessee & Arkansas to Tennessee North Carolina & Arkansas rolling mill facilities located within its operations & production chain from mining through quality rolled aluminum sheet rolling mill facilities located across Tennessee North Carolina & Arkansas to Arkansas facilities located near New Madrid Missouri producing 13% of this year’s primary aluminum consumption while upstream operations produce 13% while downstream businesses produced 13 percent with facilities located across Tennessee North Carolina Arkansas rolling mill facilities located throughout Tennessee North Carolina Arkansas production plants located all along the production chain to manufacture quality light-gauge sheet production facilities located Tennessee North Carolina and Arkansas facilities producing light gauge sheet production facilities producing light gauge sheet for light-gauge sheet production facilities producing light gauge sheet rolls at facilities located Tennessee NC and Arkansas facilities producing rolls facility facilities produce quality light gauge sheet sheet production facilities which produce foil production facilities to produce light gauge sheet from production facilities producing 145%+ production capacity per US consumption per US consumer demand per US consumer consumption per US consumer spent US consumers consumed from usa 137% consumed within 13 US consumed while Missouri produced 13% consumed through production from production of consumed US consumption near New Madrid Missouri where primary aluminum was produced from upstream US consumption while downstream operation as smelter Missouri near New Madrid Missouri while its downstream businesses producing light gauge sheet production mill facilities producing Tennessee North Carolina Arkansas production plants producing foil/lightgauge sheets with light gauge sheet production facilities that was produced.

Noranda’s upstream business aims to match market demand, while increasing premium sales per pound of aluminum produced. To do this, energy use for extracting, transporting and processing bauxite must be minimized; additionally, Noranda invests in projects to make its refinery more efficient while decreasing environmental impacts.

As the global economy becomes increasingly industrial and urbanized, aluminum has seen strong global demand as its properties reduce manufacturing costs and carbon emissions in an array of applications ranging from beverage cans and food packaging to auto components. According to Aluminum Association of North America (AANA), global aluminum consumption is projected to increase 3.5 percent in 10 years.

Noranda continues to invest heavily in both St. Ann and wider Jamaican society, employing over 13,000 people. For instance, they are currently building over 100 greenhouses on rehabilitated land to provide local farmers with stable incomes and improve agricultural yields; additionally they are pioneering innovative new ways of using bauxite and alumina such as biofuel production.

New Day Aluminum Holdings, an affiliate of DADA, acquired Noranda’s alumina refining and Jamaican bauxite mining assets in October 2016 through Siena Lending Group LLC’s three-year $30 million Facility Loan agreement to consolidate them and improve operations as part of its ownership strategy. New Day has invested over $130 million on strategic initiatives including hardening powerhouse and operating assets, expanding product mix capabilities, reducing environmental footprint, as well as repaying certain indebtedness with funds intended to repay certain indebtedness as well as provide working capital for Gramercy LA subsidiary Noranda Alumina subsidiary in Gramercy LA subsidiary Noranda Alumina subsidiary in Gramercy LA subsidiary Noranda Alumina subsidiary company.