Release Date: November 04, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Century Aluminum Co (CENX, Financial) reported strong third-quarter performance with an adjusted EBITDA of $104 million, benefiting from improved aluminum prices and updated 45X guidance.
- The company anticipates continued profitability in the fourth quarter due to favorable aluminum market conditions and falling carbon prices.
- Global aluminum demand is at record levels, driven by trends towards electrification and lightweighting, with expectations for further growth in 2025.
- Century Aluminum Co (CENX) benefits from a stable alumina supply through its acquisition of Jamalco, reducing exposure to volatile spot alumina prices.
- The company has received significant interest in its Hawesville facility for potential redevelopment, indicating potential future value realization.
Negative Points
- A safety incident at the Mt. Holly smelter resulted in a fatality, highlighting ongoing safety challenges within the company.
- The company faces potential power curtailments at its Icelandic operations due to low reservoir levels, impacting production volumes.
- Liquidity decreased in the third quarter, primarily due to inventory builds and timing of alumina shipments, although this is expected to reverse in Q4.
- The company is exposed to potential geopolitical risks in the bauxite and alumina markets, particularly with supply disruptions in Guinea.
- Despite strong market conditions, Century Aluminum Co (CENX) is cautious about restarting capacity due to potential exposure to high spot alumina prices for new volumes.
Q & A Highlights
Q: Could you speak about the process for Hawesville and when you expect to complete it?
A: Jesse Gary, President and CEO, explained that they have received significant interest in the Hawesville site, prompting them to start a formal process to evaluate strategic alternatives. The timeline for completion is uncertain as it depends on the diligence process by potential buyers.
Q: Can you provide details on your LME-linked supply agreements for alumina?
A: Jesse Gary stated that Century sources alumina from Jamalco and long-term supply agreements with credit-worthy counterparties. These contracts have over two years remaining before renegotiation is needed, ensuring no exposure to spot alumina prices for existing operations.
Q: Why not proceed with capacity restarts given strong aluminum pricing and supply stability?
A: Jesse Gary noted that while LME prices are strong, bringing additional capacity online would require sourcing alumina at spot prices, which is currently a hurdle.
Q: What is the status of the alumina supply agreement for 600,000 tonnes?
A: Jesse Gary confirmed that the contract has been extended for a couple of years with similar terms as before.
Q: Could you discuss the potential challenges in repurposing industrial assets like Hawesville?
A: Jesse Gary highlighted that repurposing involves modifying industrial assets for new uses, which requires due diligence and evaluation by potential buyers, impacting the timing of transactions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
