Oct. 2--Alcoa's North Plant in Blount County is a model of mechanical efficiency, milling slabs of aluminum nearly as heavy as a tractor-trailer rig down to sheets that are thousandths of an inch thick.

The only glitches interfering with Alcoa's production metrics are a weak economy and stalled power contract negotiations with TVA.

In March, Alcoa completed the shutdown of a smelting operation at its adjoining South Plant, laying off 450 workers, when global demand for aluminum dropped.

As Alcoa juggled fluctuating market conditions, the company has been negotiating with TVA for two years on a long-term power contract to replace one that will expire in June.

Restarting the smelting operation hinges on an economic upswing and a new power contract, said Christy Newman, Alcoa spokeswoman.

"We still need for metal prices to go back up, but there is no way we can get the smelter back in operation and the 450 employees back to work without the TVA contract," she said.

The economy and the stalled negotiations also have put a hold on some of 12 capital improvement projects totaling $850 million that Alcoa has planned, according to Newman. Included are $300 million in upgrades at the smelting operation involving furnace rebuilding, new computer control, material handling systems and sustaining capital.

Alcoa has managed to complete a major capital project at its North Plant -- limited operation of one of two new 1,200-ton pusher preheat furnaces since July. Each furnace is a $42 million investment intended to boost efficiency, safety and cut waste.

The North Plant's role is to turn 44,000-pound slabs of aluminum, called ingots, into sheets for making beverage cans. To start the process, the ingots must be heated from room temperature to about 1,000 degrees to make them pliable to be worked by machinery.

Until the pusher preheat furnaces were installed, Alcoa, which began operating in 1942, used the same box furnaces installed in about 1941, said Jeff Weida, hot line manager at the North Plant. The older furnaces heat eight ingots at a time, stacked horizontally like a deck of cards. A typical ingot is about 23 feet long, 21 inches thick and weighs about 44,000 pounds.

Because heat rises, the ingots at the bottom of the stack cool more quickly than those above, and they tend to bow in the middle.

"You can have a temperature variance of plus or minus 100 degrees from one ingot to the next," Weida said.

Bowed ingots have to be worked back and forth on rollers until they are flat enough to enter the milling operation. The process holds up production time and grinds off slivers from the ingot, wasting material as well, Weida said.

A pusher preheat furnace has several advantages, he said. It can hold 48 ingots, stacked vertically so they don't bow. It discharges them one at a time ready to roll right into the hot line, where two reversing mills and a five-stand mill gradually squeeze the 21-inch slab into a one-eighth-inch-thick coil that is pressed even thinner on the cold rolling line.

The one pusher preheat furnace has allowed the plant to take about 10 of its 27 box furnaces off line, Weida said. "Instead of about 128 ingots a day, we are able to process about 192 a day now," he said.

With its smelting operation idled, Alcoa is relying more heavily on its can-reclamation process at the North Plant for aluminum.

"With two (furnaces) we could be that much more effective, that much more efficient, but you know, it takes money to make money," Newman said.

Right now, a lot of Alcoa's revenue-producing capability hinges on getting a good power contract with TVA, she said.

"There are $850 million in capital improvements we have planned for the next 10 years, but a lot of it hinges on the fate of that South Plant," she said.

Alcoa is able to produce 40 percent of its power needs through its system of four dams, but the rest comes from TVA. Without a favorable power rate from TVA, Alcoa will not be able to restart the smelter and return its employees to work, Newman said.

Brett McBrayer, manager of Alcoa's Primary Metals division, has said the future of the smelting operation grows uncertain without the power contract.

Newman said negotiations with TVA have been going on since 2007 but that the parties simply can't agree on cost. According to Alcoa, its power rate at the South Plant is among the highest 15 percent for smelting operations in the nation. Specifics of the TVA contract were not disclosed.

"Alcoa has long been a valued customer of TVA's, and we are working diligently to reach agreement on a long-term power contract for the future. While these contract negotiations are confidential, we are working to reach an agreement that will allow Alcoa to operate its Tennessee facility while, at the same time, not disadvantaging other Valley ratepayers," TVA spokesman Jim Allen said in a statement.

Newman said she believes both sides would like to reach a contract, noting that Alcoa is one of TVA's largest customers. "We believe TVA has a vested interest in this just as we do," she said. "We are going to push for a resolution to this by the end of the year."

Business writer Ed Marcum may be reached at 865-342-6267.

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