Kaiser Powers Up Gramercy Facility Company Will Pay $513,000 In Settlement With Labor
Kaiser Aluminum Corp. has restarted its refinery in Gramercy, La., 17 months after an explosion hurt 29 workers and stopped production.
At the same time, the company, with a rolling mill in Trentwood and idled smelters in Mead and Tacoma, agreed to pay a $513,000 fine that it said ends litigation with the U.S. Department of Labor.
Kaiser maintains it did nothing wrong and is in settlement talks with people who have sued the Houston-based corporation because of the explosion, said spokesman Scott Lamb.
Many are neighbors of the plant who had their homes and cars damaged by the blast.
The rebuild of the Gramercy plant was a $275 million undertaking - higher than the $200 million estimate the company originally planned to spend.
Lamb said contingency costs, the refinery’s fast-track rebuild and the installation of special safety features pushed up the cost.
During the next several weeks, the company will steadily boost production to about 75 percent of the plant’s new capacity.
As the refinery reaches full production, it will be able to make about 1.25 million metric tons of alumina, made from bauxite and shipped to smelters to make metal. A metric ton is about 2,200 pounds.
That will happen after Kaiser finishes the final phases of construction next March.
About 80 percent of the alumina from the Gramercy refinery is sold to two smelters up the Mississippi River. The rest is sold to nearby chemical factories.
In a prepared statement, Kaiser CEO Ray Milchovich said an insurance settlement should pay for about half the $275 million to build the new plant. The rest will come from the aluminum maker’s “operating cash flow and other resources.”
“Despite having to fund our share of the Gramercy rebuild, the company has maintained adequate liquidity throughout the project,” Milchovich said.
In June, the company sued seven companies alleging that the Gramercy explosion resulted from the faulty installation of the electrical system. Also, the company blamed negligence of a contract employee.
An investigation by the Mining Safety and Health Administration pinned fault for the explosion on Kaiser. The agency determined that following a power outage, too much steam pressure built up in several large refinery tanks and caused the explosion.
The report said Kaiser had allowed the pressure relief safety systems to be disabled. In all, MSHA cited Kaiser for 21 safety law violations.
In its own lawsuit against the seven companies, Kaiser wants money to pay for property damage. Also, it wants to be repaid for its loss of business; the alumina it had to purchase on the spot market to fulfill its contracts; judgments and settlements from lawsuits and claims resulting from the explosion; and damage to its stock price.