For decades, the Mount Holly smelter in Moncks Corner has been casting molten aluminum into billet, which then gets extruded into a variety of shapes for automotive, aerospace, construction and other uses. Picture Play-Doh, pushed through the press, and out comes the aluminum can or wheel, Gary explained.
Most of Mount Holly’s billet goes into the automotive and construction industry, and looking forward, a key field for the plant is electric vehicles, said Gary, who replaced Mike Bless as CEO in July. Electrical vehicles, in fact, require more aluminum than traditional internal combustion engine vehicles.
“That's because the aluminum in electrical vehicles tends to be lighter, so they need more aluminum, so they can go a longer distance,” Gary said. “Also, aluminum is used to cool the batteries, therefore housing around all the battery packs is made of aluminum extrusions.”
Future firing of Mount Holly’s second pot line, and hiring another 100-plus employees, will bring the smelter back to 75% of its 229,000 metric tons of annual aluminum production capacity.
The rebuild is key for not just Mount Holly and its more than $60 million investment, but to the U.S. aluminum industry, which is down to six working aluminum smelters compared to 33 in 1990. Aluminum is necessary national security, Gary said, as the product is used in military applications, as well as the electrical grid.
While the country has seen a massive turnaround of smelters coming back online since the 2018 import measures imposed under Section 232 of the Trade Expansion Act of 1962, the pandemic has also caused aluminum prices to surge, gaining almost 30% this year, Gary said.
“As we saw the unanticipated consumer spending, the aluminum price started to recover and get even stronger... stronger than pre-pandemic, stronger than we've seen in a long time,” he said.
In July, aluminum traded at almost $2,600 per metric ton, the highest price since June 2011, according to Trading Economics — a heftier feat considering today’s higher demand and tighter supply. The price is a steady increase from July 2019, when aluminum was valued at $1,797 per metric ton.
The effects of ascending aluminum prices have been felt worldwide. Reynolds Wrap, the nation’s leading producer of aluminum foil, said it’s facing upwards of $400 million in costs from aluminum and resin, while Dutch brewing company Heineken warned of a “material effect” taking shape in 2022 during its first-half earnings report.
In perspective, with only six smelters in the country running, the U.S. will produce a little more than one million tons of aluminum this year, but consumers will use between 5.5 million and 6 million tons, Gary said. The difference will come from imports, including about 3 million tons from Canada.
“We're way short of what we need, just to meet our own demand,” Gary said. “That’s why programming like 232 are so key, because it's enabling the industry to expand and to supply more to meet our own internal requirements. It's a good future for Mount Holly, it’s a good future per century, and we're excited.”