Century Aluminum closes deal on Kentucky smelter

Century Aluminum of Kentucky, a subsidiary of Century Aluminum Co., said Thursday it reached a deal for a new, long-term power contract with E.ON U.S. and Big Rivers Electric Corp. for its Kentucky smelter.

The company said it has been working with E.ON and Big Rivers for more than five years to re-negotiate their existing contract to provide long-term, cost-based power to two smelters in western Kentucky.

E.ON has agreed to help Century mitigate a portion of the risk in the short term, and assume Century's obligations. In late May, Century said it would not be able to move forward with the deal due to unfavorable business conditions.

As part of the deal, E.ON will defer payment on roughly $40 million, which it previously agreed to pay to Century upfront and defer funding on an escrow account of roughly $40 million. E.ON will pay these amounts as Century consumes power under the deal.

If the amount exceeds $80 million, Century will repay E.ON over time, as long as aluminum prices exceeded certain thresholds.

At full capacity, the smelter is expected to generate 244,000 tons of primary aluminum annually from five potlines.

Shares of Century fell 4 cents to $6.53 in afternoon trading.