Century Aluminum’s Optimistic Earnings Call Highlights

Century Aluminum Co ((CENX)) has held its Q4 earnings call. Read on for the main highlights of the call.

Century Aluminum Co. shared a generally optimistic outlook during its recent earnings call, highlighting strong operational performance in 2024 and potential benefits from U.S. tariffs. The company also underscored progress on a new U.S. smelter project, despite encountering challenges such as operational instability at Mt. Holly and increased costs due to alumina supply issues.

Strong Full Year 2024 Performance

Century Aluminum reported an adjusted EBITDA of $245 million for 2024, with $82 million generated in the fourth quarter. This robust performance was driven by strong aluminum prices and low energy costs, positioning the company well for future endeavors.

Record High Alumina Prices Settled

In late 2024, alumina prices reached unprecedented highs. Despite this, Century Aluminum successfully mitigated costs through a financial settlement for a force majeure declared by a supplier, showcasing the company’s strategic approach to managing price volatility.

Operational Success at Jamalco and Seabree

Jamalco and Seabree demonstrated significant operational achievements, with Jamalco reporting its highest monthly production since its acquisition and Seabree completing one of its best operational years. These successes contribute positively to Century’s overall performance.

Positive Impact of U.S. Section 232 Tariffs

The reinstatement of Section 232 tariffs on aluminum by President Trump is anticipated to significantly benefit Century’s U.S. operations. The tariffs are expected to drive increases in the Midwest Premium, enhancing the company’s profitability.

Progress on New U.S. Smelter Project

Century Aluminum is making strides with its new U.S. smelter project, having secured a $500 million grant from the Department of Energy. The company is nearing completion of site selection and energy supply negotiations, signaling strong future growth prospects.

Operational Instability at Mt. Holly

Mt. Holly experienced operational instability in Q4 due to a carbon side excursion, leading to increased costs and decreased production. Addressing these issues will be critical for maintaining overall operational efficiency.

Higher Costs Due to Alumina Force Majeure

A force majeure by an alumina supplier necessitated spot purchases at elevated prices, resulting in a one-time cost impact of $10 million to $15 million in Q1 2025. This highlights the challenges faced by Century in managing supply chain disruptions.

Seasonal Energy Cost Increase

Century Aluminum anticipates a $15 million EBITDA headwind in Q1 2025 due to normal seasonal increases in power prices caused by cold weather. This is a recurring challenge that the company is preparing to address.

Headcount Reduction at Jamalco

In an effort to lower labor expenses and boost productivity, Century implemented a 5% workforce reduction at Jamalco. This strategic move is part of the company’s broader efforts to enhance operational efficiency.

Forward-Looking Guidance

Looking ahead, Century Aluminum provided comprehensive guidance for 2025. The company projects Q1 2025 adjusted EBITDA between $75 million and $85 million, despite challenges from alumina supply disruptions. With spot LME aluminum prices rising and the Midwest Premium increasing, Century anticipates significant profitability. The global aluminum market’s expected deficit and strategic advancements like the U.S. Section 232 tariffs and operational improvements at Jamalco and Mt. Holly position the company for a favorable market environment in 2025.

In conclusion, Century Aluminum Co.’s earnings call reflects a positive sentiment, with strong operational performance and strategic initiatives poised to drive future success. While challenges such as alumina supply disruptions and operational instability at Mt. Holly persist, the company’s proactive measures and favorable market conditions signal a promising outlook for 2025.