Future of Ferndale smelter unknown as BPA and prospective buyer fail to reach energy deal

Blue Wolf Capital Partners, the private equity firm that was trying to restart the Alcoa Intalco smelter in Ferndale, ended its energy contract negotiations with Bonneville Power Administration (BPA). A union worker close to the negotiations said Blue Wolf agreed to the power rates but BPA didn’t offer enough power to restart the aluminum plant. 

BPA spokesperson Doug Johnson told The Northern Light in an email that Blue Wolf Capital Partners, prospective buyers of the idled smelter, paused negotiations on December 15 after a year-and-half of discussions. 

“At any point we are ready to resume discussions to provide a portion of the electricity Blue Wolf needs to restart the plant,” Johnson said in a statement. “BPA and the Department of Energy are supportive of the effort to reopen the facility.”

Alcoa announced in April 2020 it would curtail the smelter’s operations due to low aluminum prices affecting the smelter’s profitability and started layoffs of about 700 union employees shortly after. Blue Wolf contacted BPA in July 2021 in an attempt to reach a power contract, which many of the smelter’s supporters thought to be the last major hurdle to restarting the smelter.

BPA told Blue Wolf it could provide 20-25 percent of the energy required to restart the smelter, which equaled 100 of the 400 megawatts needed (BPA provides the city of Seattle about 1,200 megawatts annually.) BPA gave 75 megawatts to Alcoa in its last contract, but that number varied throughout the years, Johnson previously said. 

Alcoa’s energy contract with BPA, which allowed Alcoa to purchase large quantities of discounted power, expired before Blue Wolf became interested in the smelter. Blue Wolf tried to resume the low-cost industrial power rate that BPA provided Alcoa, but BPA denied that request because Blue Wolf was not listed in the 1980 Northwest Power Act that ensured low-cost electricity to ratepayers. BPA instead offered Blue Wolf a market rate that was higher than the industrial rate.     

Johnson said he believed negotiations were going well and thought unusually high electric market prices may have been why Blue Wolf stopped discussions. However, a union representative said Blue Wolf agreed to BPA’s market prices but the amount of power BPA was willing to sell was not enough to restart the smelter.

“We believe BPA did not participate in this process with the intent to reach an agreement,” said Luke Ackerson, business representative for the International Association of Machinists and Aerospace Workers (IAMAW) District 160. “I am hesitant to call it a negotiation, because BPA was never fully engaged in discussions. They clearly had ulterior motives that they were unwilling to share with us.”

Johnson declined to comment in response.

Ackerson said the union was not giving up. IAMAW District 160 is in discussion with other groups trying to restart the smelter but Ackerson said BPA’s unwillingness to negotiate a practical agreement was preventing the smelter from restarting. Ackerson did not say which other companies were interested in restarting the smelter.  He added the union members felt let down by BPA and the Biden administration.

In May, union members entered a labor deal with Blue Wolf that Ackerson previously said had improvements for workers compared to former Alcoa agreements. 

The state has $10 million secured in its budget until June 2025 to reopen the smelter with environmental improvements. The budget had $2.4 million included in 2021 to reopen the smelter with another $7.6 million  added last year. Environmental improvements would remove 65 percent of previous carbon dioxide emissions, equaling at least 750,000 metric tons per year, in the state’s effort to decarbonize the industry sector.  

Proponents of restarting the smelter have said its revitalization will support cleaner energy and strengthen national security as domestic aluminum production has moved to Russia and China. Intalco was the last operating aluminum smelter west of the Mississippi River when it closed.  

“The U.S. primary aluminum industry has been in steady decline for the last several decades, shipping jobs overseas and importing pollution as our country purchases foreign goods made with lower environmental and labor standards – often from countries that are not our allies,” wrote Jason Walsh, executive director of BlueGreen Alliance, a group of labor unions and environmental organizations, in a statement. “A company was ready to change that by reopening the Intalco aluminum smelter and creating good union jobs making the clean aluminum we need to power our clean energy future here in the United States.”

A Blue Wolf spokesperson declined to comment.