Noranda plant bought by Swiss company

The Noranda plant in New Madrid, Missouri, has a new owner and a new future. What that future entails, however, is unclear.

According to Missouri bankruptcy court documents, ARG International, a metals trading company based in Switzerland, submitted a $13.7 million bid for the Southeast Missouri property. Another company, MFR II LLC, an asset-liquidation business, submitted a “stalking horse bid” of $13 million. Stalking horse offers are meant to test a market ahead of an auction, and protect a debtor from low bids.

On Friday, a Missouri bankruptcy court accepted ARG’s bid, according to John Parker, Noranda’s corporate controller. The company declined any further comment on the issue.

New Madrid city officials were on hand at the auction Wednesday and spoke to ARG’s legal representation, according to New Madrid city administrator Richard McGill.

On Friday morning, McGill said the city is unaware of ARG’s intentions for the property, and suspects the company itself may not be fully certain either. He said ARG officials did not visit New Madrid or the plant before purchasing it.

“They kind of bid on it sight unseen,” McGill said.

City and state officials worked together to entice businesses to consider purchasing the New Madrid smelter in the months leading up to the auction, McGill said, connecting potential buyers with incentives and arranging for money to help with infrastructure upgrades.

“It’s not a city of New Madrid issue and it’s not a county issue,” McGill said. “It’s a regional issue and, really, a state issue.”

With ARG poised to take over the Noranda plant, McGill is cautiously optimistic about the future of the smelter. Had an asset-liquidation company taken ownership, he said, the chances of the plant running again would be very slim.

“We didn’t see the high probability of someone coming in and operating it under those circumstances, so I think this is probably the most optimistic of bidders that were there,” McGill said.

The New Madrid smelter has battled profitability issues in the past, partially because of high power rates from Ameren Missouri. In recent months the two companies appealed to lawmakers in an attempt to lower power rates and allow the smelter to continue operations, but ultimately the plan didn’t work out.

“Ameren Missouri has been working with Noranda and state policymakers for some time, hoping to see this important employer in Southeast Missouri have a chance to restart operations,” Warren Wood, vice president of External Affairs & Communications of Ameren Missouri, said in a written statement. “We have not been involved in this sale process, but are very interested to learn more about the new owner’s plans for the facility.”

The fate of two other Noranda properties up for auction, an alumina refinery in Gramercy, Louisiana, and a bauxite mining company in Jamaica also are unclear, as is ARG’s interest in owning them along with the New Madrid plant.

The closure of the Noranda plant resulted in hundreds of lost jobs in the region. McGill said, when faced with unemployment, some New Madrid residents moved away to take new positions. Others took local jobs that pay considerably less than what the workers had been making at the Noranda plant. Despite the struggles, McGill said New Madrid has not seen much economic downturn because of it.

“But,” he said, “we thought it would be at least two years before we saw a trickle-down effect.”

McGill praised state and local leaders for their efforts in the last few months, as well as Noranda officials, whom he said provided a high level of transparency and kept up with its property management obligations throughout the entire ordeal. As for the future of the plant, and whether it will smelt again, McGill said, “We’re hopeful.”

bbrown@semissourian.com

(573) 388-3630

Pertinent address:

391 St. Jude Industrial Park Highway, New Madrid, Mo.