Noranda Announces Steps to Reduce Costs and Address Business Challenges in its Upstream Business
· 25% Reduction of Upstream Workforce
· Potential Curtailment of Operations at Aluminum Smelter and Alumina Refinery
· Potential Curtailment at Aluminum Smelter Not Expected to Impact Flat-Rolled Products Business
· Force Majeure Notice to Government of Jamaica Related to Bauxite Production
Franklin, Tennessee - January 13, 2016 - Noranda Aluminum Holding Corporation (OTC: NORN) ("Noranda" or the "Company") today announced actions principally designed to reduce costs in the Company's integrated upstream aluminum business, which comprises its bauxite mining operation in Jamaica, its alumina refinery in Gramercy, Louisiana, and its primary aluminum smelter in New Madrid, Missouri. These actions are in response to continued low aluminum prices, the previously announced idling of two pot lines at the Company's aluminum smelter in New Madrid, Missouri, and other business issues affecting the Company's upstream operations.
"These actions reflect our intense focus on managing cash and available liquidity in an especially challenging business environment for our integrated upstream business," said Layle K. "Kip" Smith, Noranda's President and Chief Executive Officer. "While managing through an extended aluminum price trough, our upstream business has recently faced additional operational and commercial challenges. These challenges include the idling of two pot lines at New Madrid, an unfavorable arbitration panel ruling regarding a bauxite production levy in Jamaica, and the bankruptcy filing by our principal third party bauxite customer. While the actions we've announced today are difficult, they are a necessary response to our current challenges as we proactively pursue other measures to reduce our costs in the upstream business."
The Company today initiated a workforce reduction involving approximately 190 employees, approximately 90% of which involve employees in the Company's integrated upstream business. Approximately 75% of the total reduction relates to staffing adjustments at the New Madrid smelter which were planned prior to the January 7, 2016 electrical circuit failure that resulted in two of the smelter's three pot lines being idled ("the New Madrid Incident").
WARN Notifications at New Madrid and Gramercy
The Company has also issued the following notifications pursuant to the Federal Working Adjustment and Retraining Notification Act (WARN):
Noranda Aluminum, Inc., the Company's wholly owned subsidiary, notified employees of the New Madrid smelter that, in addition to the workforce reductions initiated today, approximately 350 employees will be terminated or laid off by February 4, 2016. This additional action became necessary following the New Madrid Incident.
Smelter employees were also notified that the site's remaining operations will be curtailed on or before March 12, 2016 unless the Company is able to secure a substantially more sustainable power rate for the smelter and materially improve the Company's overall liquidity.
As Noranda's Flat-Rolled Products business sources metal from a portfolio of suppliers, the Company believes it has access to sufficient sources of aluminum to meet customer commitments for flat-rolled products. Accordingly, the Company believes the curtailment of aluminum smelting operations will not adversely impact the operations of the Flat-Rolled Products business.
Noranda Alumina LLC, the Company's wholly-owned subsidiary notified employees of its alumina refinery in Gramercy, Louisiana, that it expects to curtail the refinery's operations on or before March 12, 2016 unless the Company is able to (1) negotiate meaningful and substantial fiscal regime relief with the Government of Jamaica ("GOJ") (including tax and production levy relief); (2) achieve meaningful and substantial cost reductions at the alumina refinery in Gramercy, Louisiana and the bauxite mining operation in St Ann, Jamaica (including, but not limited to, cost savings resulting from workforce reductions); and/or (3) secure suitable replacement volume for alumina currently provided to the New Madrid smelter.
Force Majeure Notice to Government of Jamaica Related to Bauxite Production
Noranda Bauxite Limited, the Company's wholly-owned subsidiary, notified the GOJ that the New Madrid Incident is an event of force majeure which will require Noranda Bauxite to materially reduce mining plans previously provided to the GOJ and related entities. Noranda Bauxite also advised the GOJ that the filing of a case under Chapter 11 of the Bankruptcy Code by a significant bauxite customer, Sherwin Alumina Company, LLC, may result in additional material reductions to Noranda Bauxite's mining plans.
About the Company
Noranda Aluminum Holding Corporation is a leading North American integrated producer of value-added primary aluminum products, as well as high quality rolled aluminum coils.
John A. Parker
Vice President of Communication and Investor Relations
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Source: Noranda Aluminum Holding Corporation via Globenewswire