Guest editorial - Cooperation gave Noranda a fighting chance

By Peter Kinder

President pro-tem of the Missouri Senate

A key success of the legislative session we concluded in May was passage of a bill that allowed the Noranda Aluminum plant to keep its doors open as the Bootheel's largest employer.

Noranda employs more than 1,100 of our people in our state's poorest region, mostly in high-paying union jobs where they are represented by the United Steelworkers of America.

One day last February, Noranda executives visited the offices of this writer on a near-emergency basis. Their message: Rapidly rising power costs threatened the survival of their Marston plant in New Madrid County.

Aluminum smelting is a hugely energy-intensive process. At a gigantic 470-something megawatts of electricity, Noranda is far and away Missouri's largest single user of electric power. (We were told that Anheuser-Busch is second, at something like a third of Noranda's load.) Moreover, it is in the nature of aluminum smelting that the plant must have that gigantic load going 24-7, 365 days a year, unlike most other industrial users, who don't need anything close to the maximum load around the clock.

The upshot of this is that next to personnel, power is Noranda's largest fixed cost. As Noranda was faced with an overnight jump in power costs of something like 30 percent or more, one can see how the survival of the plant was in question.

Other tough realities of today's global marketplace are bearing down on the Norandas of the world. To summarize: China. South Africa. Brazil. Russia. These countries, and more besides, are adding huge new aluminum processing capacity.

When vast new production facilities such as these are coming on line, it isn't hard to see that Noranda is what economists call a "price taker." That is to say, Noranda has no ability, in the competitive international market, to set their price for their product.

Also coming quickly into focus, on that cold day in February, was the short-term answer to Noranda's immediate survival challenge: Passage of a bill, previously unprecedented in Missouri, allowing Noranda to purchase electric power from pretty much anyone, in a competitive, or "de-regulated" market.

Enter Senate Bill 555, an act, in legislative parlance, that "addresses the ability of certain aluminum smelters and cities to purchase energy outside of Public Service Commission oversight." Introduced by this writer at a late point in the four-and-a-half month session, we were able to work together across both party and ideological lines, address many nervous players from many different industries, mollify the concerns of the steelworkers and others of our friends in the trade union movement, and pass the bill through both houses.

Not only that, but this unnatural act we accomplished as well: We succeeded in attaching to SB 555 what lawmakers call an "emergency clause," which guarantees that the bill takes effect immediately on being signed by the governor.

Accolades are owing to many who helped bring this about.

These include especially Reps. Lanie Black, R-Charleston, and Peter Myers, R-Sikeston, along with other Southeast Missouri state representatives; Sen. Bill Foster, R-Poplar Bluff, who represents New Madrid County; my chief of staff, Jeff Davis, a Bootheel native who proved expert not only on the legalities, but also on baby-sitting and hand-holding of one and all; and Gov. Bob Holden, for signing the bill we placed on his desk.

See? All is not acrimony and bitterness in Jefferson City. We came together. Noranda has a fighting chance to survive.