CFAC plant turns 50

On Friday, aluminum turned to gold when Columbia Falls Aluminum Co. had its 50th anniversary.

It was, however, a bittersweet day without party or celebration.

"We're sort of in financial straits right now, and we don't have a lot of discretionary money floating around," CFAC general manager Steve Knight said.

Gone is the company's position as the county's biggest employer (it once employed more than 1,200 people). Today, with 150 employees, CFAC is holding down 15th place on the list - in a tie with Target Corp.

On Aug. 12, 1955, the plant first went on line two miles northeast of Columbia Falls near Teakettle Mountain. Construction costs totaled $65 million - $20 million over budget - for the plant owned by Anaconda Copper Mining Co.

Production at Anaconda started with two potlines - potlines being the workhorses of the aluminum industry. Through an electrochemical process, potlines convert alumina - the raw material of aluminum - into molten aluminum. Two pounds of alumina are required to produce one pound of aluminum.

"A potline is a series of electrochemical cells called 'pots' that are hooked together electrically," Knight said. "When you pass electricity through the molten bath in these pots, the alumina is dissolved."

Oxygen is then emitted, and what remains in the pot is aluminum.

During the first year, 67,500 tons were produced. The plant later added three more potlines. At the height of its success, the Columbia Falls plant was producing 180,000 tons of aluminum annually.

The facility has changed hands several times over the years. Atlantic Richfield Co. purchased Anaconda during 1977, becoming CFAC's second owner. When ARCO began divesting itself of its metals interests, Montana Aluminum Investors Corp. bought CFAC in 1985.

During 1999, the plant was acquired by Glencore International AG, a metals-trading firm and the current owners. According to its corporate publications, the Swiss company focuses "on the production, sourcing and marketing of metals and minerals, energy products and agricultural products."

Not all the plant's years have been mellow ones.

When former ARCO officer Brack Duker purchased the plant under the name of Montana Aluminum Investors Corp. during 1985, ARCO had been threatening to close the facility because of the high cost of operation and materials. Duker picked up CFAC for the bargain price of $1 - plus $3 million for the inventory.

Duker's reorganization plan for the company involved cutting the work force and wages in exchange for a 50-50 profit-sharing plan. This system worked well initially, but, by 1992, employees had filed several class-action lawsuits claiming they were receiving only one-third of the total pie - not the promised half.

The lawsuits were settled during 1998 for $97 million.

During early 2001, the entire plant was idled for the first time in its history. When it returned to line 13 months later, it ran three potlines, according to Haley Beaudry, CFAC's manager of external affairs. That dwindled to a single potline during March 2003.

There are two major costs involved in manufacturing aluminum: power and alumina, the raw material. Both elements are now "quite expensive," Knight said.

The cost of power has been an ongoing problem for CFAC because the manufacturing process is extremely power dependent.

Beaudry said CFAC's relationship with Bonneville Power Administration historically has been conducted in five-year contracts. The current contract ends September 30, 2006.

"Bonneville has come out with a record of decisions of what they're going to do," Knight said. "If you get inside that decision, we believe what they're going to do is offer us financial assistance, such that we go buy power on the open market and they'll then buy down the price of that. But they'll buy down only so far - only to the rate they're selling to utilities - so it really depends on what their rate turns out to be and what the market price is."

For the next 12 months, CFAC will buy power directly from Bonneville, which will allow the firm to operate only one potline, Knight said. Purchasing power from a different vendor is currently not an option because of the expense.

In terms of alumina - the second major manufacturing cost - the bulk of it is shipped in from Asia. Beaudry said its price has risen "drastically" during the past three years.

"The Chinese have built a lot of aluminum plants, and they need this material to run their own plants," he said. "The worldwide demand for alumina is much higher than the supply."

Aluminum - the finished product - is considered a commodity and is traded daily on the London Metal Exchange. Its selling price is governed by world market conditions.

Knight said that 100 percent of the aluminum CFAC produces is sold to Glencore, which then resells it. Glencore tells CFAC where to ship the finished product.

"We work all the time to try to increase production," Beaudry said. "But we're subject to the market conditions.

"Because we've made so many improvements and upgrades here, I believe we've got the most efficient plant of its kind in the world."

Reporter George Kingson may be reached at 758-4438 or by e-mail at gkingson@dailyinterlake.com.