Sherwin Alumina Closure to Impact US Caustic Soda

The bankruptcy and pending closure of Sherwin Alumina(that has produced aluminum oxide, or alumina for more than sixty years beginning in 1953), near Corpus Christi, Texas, will remove about 150,000 tonnnes/year of caustic soda demand from the US market, according to people familiar with the plant.

The company informed workers last week that the 1.65m tonne/year plant in Gregory, Texas, will soon “commence an orderly wind-down of its operations” after a months-long lock-out of 400 union workers.

The bankruptcy of the company’s bauxite supplier, Noranda Aluminum, and its rejection of its supply contract with Sherwin sealed the company’s fate, Sherwin's management told its 600 workers.

“Unfortunately, at this time, the best available option for our stakeholders is an orderly wind-down of Sherwin’s operations,” CEO Thomas Russell told workers in a statement.

The plant has been supplied with liquid caustic soda by pipeline from a nearby supplier through contract.

Because the plant is on the coast, the displaced material will simply move to the export market, a representative of the supplier said.

“The lost caustic demand from the Sherwin refinery will be exported from our Ingleside plant and the tons they were producing will be produced in other major alumina production regions of the world like Brazil and Australia,” the source said.

Additionally, blunting the impact is the fact that the plant has been running at reduced rates for months and market expectations have been that it would eventually close.

Sherwin and Noralco are both victims of high production rates in China and long supply for alumina and aluminium and low prices.

Most US plants have cut capacity or moved operations to plants nearer bauxite supplies, the raw material that is refined by caustic soda to make alumina.

Those areas include South America and Australia, which have become larger and larger buyers of US caustic soda.

The timeline for the closure of the plant is unclear. The company seemed to indicate that it would shut down by the end of the year.

A media representative hired by the company said the plant continues to operate, at least for the near future.

Under the current plan, the company assets will be acquired by an affiliate of its senior secured lender, Commodity Funding. The proceeds of the sale to Corpus Christi Alumina will fund a recovery for its general unsecured creditors, the company said.

Late last year, Alcoa suspended 1.1m tonnes/year of refinery capacity at its Point Comfort, Texas, plant and idled three smelters.