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Century Aluminum (CENX) Inks Mt. Holly's New Power Contract

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Zacks Equity Research
·3 min read
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Century Aluminum Company’s CENX fully-owned subsidiary, Century Aluminum of South Carolina, reached an initial agreement for a new three-year power contract with the South Carolina Public Service Authority (or Santee Cooper) for the Mt. Holly aluminum smelter.

The company expects the contract to supply at least 290MW of electric power, which will enable the smelter to boost its current production by 50% through the addition of one-half of one potline to its current operation. Also, this will lead to total production of 75% of Mt. Holly’s full capacity.

Further, the parties have extended the current contract that is slated to expire on Dec 31, 2020 by three months. This move provides them with necessary time to finalize the new contract and obtain the governmental approvals.

Further, Century Aluminum expects the new contract to start on Apr 1, 2021 and continue till December 2023. The company is also looking forward to rebuild the cells and prepare the plant to operate for the longer term, including hiring an additional 70 staff to support the incremental one-half potline.

Century Aluminum’s shares have surged 65.3% in the past year compared with the industry’s 11.4% rise.

In third-quarter 2020 earnings call, Century Aluminum stated that the industry in the United States and Europe is recovering. The company is also seeing an improvement in order rates. While metal price has strengthened, it continues to be impacted by the volatility affecting all risk assets, the company noted.

Zacks Rank & Key Picks

Century Aluminum currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the industrial products space are Ampco-Pittsburgh Corporation AP, AB SKF SKFRY and Rockwell Automation, Inc. ROK, all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Ampco-Pittsburgh has an expected earnings growth rate of 21.6% for 2021. Its shares have returned 75% in the past year.

AB SKF has an expected earnings growth rate of 14% for 2021. The company’s shares have gained 26.5% in the past year.

Rockwell has an expected earnings growth rate of 12.4% for fiscal 2021. The company’s shares have increased 23.2% in the past year.

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