COLUMBUS, OHIO (AP) - Aluminum maker Ormet Corp. says it is seeking a court order against Glencore International AG to prevent the Swiss commodities trader and producer from halting deliveries of the ore used to produce the metal to its southeast Ohio plant.
Ormet filed on Thursday for a preliminary injunction against Glencore from the U.S. District Court for the Southern District of Ohio. The injunction would prevent Glencore from breaking a contract for the deliveries of alumina, the principal raw material used to make aluminum.
Stopping shipments could force Ormet to close its reduction plant in Hannibal, where ore is turned into aluminum, said Ormet Chief Executive Officer Mike Tanchuk.
The plant employs about 1,000 workers and produces about 266,000 metric tons of aluminum each year.
“The shipments are coming, but we will run out of this raw material sometime by the end of May or early June,” Tanchuk said. “So we’ve got to fix this thing quickly.”
Aluminum prices have declined significantly since the contract was agreed upon in May 2008, Tanchuk said. Under the deal, Glencore agreed to supply the alumina in exchange for tolling fees.
“The real issue is the price they’ve committed to pay us is far above the current market for aluminum,” Tanchuk said.
The cost of switching to another alumina supplier would be too steep, Tanchuk said. If the dispute is not resolved, the plant could run out of alumina and shut down by the end of May or early June, he said.
“The market price is so low for aluminum right now, we wouldn’t be able to survive and sell the metal we made,” he said.
The contract was agreed upon in May 2008 and expires at the end of this year. All of Ormet’s aluminum capacity is currently dedicated to producing aluminum for Glencore under the agreement.
Taking legal action was a last resort after negotiations with Glencore broke down, Tanchuk said. In the court filing, Ormet also began arbitration against Glencore _ but that process likely would not conclude in time to save the plant, Tanchuk said.
Glencore spokesman Marc Ocskay said Friday that some alumina shipped to Ormet comes from a refinery in Jamaica that has been temporarily shut down. The company’s obligation to ship that portion of alumina is suspended until that refinery opens, and under the terms of the contract it is not required to provide the material from another source, Ocskay said.
Ormet is headquartered in Hannibal, a manufacturing town that hugs the Ohio river. The plant was shuttered for about a year and a half when 1,200 workers staged a strike in 2006.
The company closed another plant located next door in 2005, shedding about 600 jobs.
In recent years, Ormet has also shuttered a refinery in Burnside, La., and plants in West Virginia and Indiana.