Story Photos
 Photo Bill Wagner The dock at Longview Aluminum was where imported alumina, a raw material used in the manufacture of aluminum, was brought in for use at the plant. To raise operating funds, the owners say they have been selling the alumina. |
Longview Aluminum has been selling off its crucial aluminum ore, according to the company's bankruptcy filings.
Sunday, May 18, 2003 9:26 AM PDT
By Pat Forgey
Printable version
E-mail this articleLongview Aluminum has been selling off its crucial aluminum ore, according to the company's bankruptcy filings.
Money from those sales earned the company $3.9 million since January 2002, but loss of that resource may make it more expensive and difficult to produce aluminum again.
Longview Aluminum filed for bankruptcy protection in March, but the company maintains that it is planning to reorganize and resume operations, not liquidate.
Wes Wheeler, president of the Longview Federated Aluminum Council, representing unionized workers at the smelter, said he thought owner Michael Lynch's recent moves will make it harder than ever for the plant to reopen.
"It appears that he's trying to get rid of all the inventory that he'd need for a restart," said Wheeler, who learned the amount of the ore sales from The Daily News on Friday.
Longview Aluminum, which once employed 900 workers, hasn't produced aluminum since being purchased by Lynch and his partners in 2001. Two other Lynch companies, McCook Metals and Scottsboro Aluminum, have been liquidated by bankruptcy courts, leaving steelworkers' union members unemployed.
"We think we have a good plant, and he's taking it down just as he did his other businesses," Wheeler said.
Longview Aluminum recently filed its statement of financial affairs in federal bankruptcy court in Illinois. The key filing listed the company's current assets and claims, as well as income and expenses over the last year.
Claims against the company total $65 million, with assets of $3 million. The principal claims against the company come from the federal Pension Benefits Guarantee Corporation, which says Longview Aluminum is responsible for paying pensions of other companies also owned by Lynch.
The company reported assets of $451,000 in cash and a $2.5 million letter of credit, but hasn't yet listed the value of the plant and its equipment and stock. An appraiser with experience in the metals industry, Dovebid Valuation Services, Inc., has been hired by Lynch to make an estimate of the plant's value at a forced liquidation, an orderly liquidation, or as a going concern.
(Lynch has argued, for property tax purposes in Cowlitz County, that the plant is worth nothing.)
The bankruptcy papers list other assets, including large amounts of materials, including nearly 14 million pounds of alumina, the raw material from which aluminum is made, as of March. 31. The company also had nearly 7 million pounds of "aluminum in process," and 8.7 million pounds of calcine coke.
While prices of those materials fluctuate on world markets, they're likely worth millions of dollars, based on typical prices.
In the last year, during which Longview Aluminum had no revenues from operations, it did have some incidental income. It received $29 million from the Bonneville Power Administration, the last part of a total payment of $226 million it was paid for shutting down and allowing Bonneville to sell its power elsewhere, especially during the West Coast power crisis in 2000.
The largest other source of income came from selling off the plant's inventories, including a sale of $3.66 million worth of alumina ore to Glencore International's aluminum smelter in Columbia Falls, Mont., in 2002. The company sold off an additional $278,000 of alumina this year.
If Longview Aluminum is to restart, it will need ample stocks of alumina and other components of finished aluminum.
A spokeswoman for Lynch did not return telephone calls last week.
Longview Aluminum has been spending hundreds of thousands of dollars a month on salaries, much of it for the owner, and on ongoing operations and legal expenses, according to the bankruptcy papers. However, with no steady income, it doesn't have enough money in the bank for many more months of operations.
The alumina and other material sales, which have continued into 2003, have the potential to bring in millions more in revenue, but selling those assets would make a restart ever more expensive.
Wheeler said it was disappointing to see Longview Aluminum's ore being shipped to Montana.
"We want to see that place restart, but we don't see that he's doing anything to help the situation," he said.
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