Century Aluminum

Century earns the spread between London Metal Exchange aluminum prices and its production costs, with electricity representing the largest variable input. The company locks in multi-year power contracts — such as its 15-year agreement with the Tennessee Valley Authority for the Sebree smelter — to stabilize that input. This creates a return stream that functions as a call option on aluminum prices with a known strike, distinct from mining equities that carry iron-ore and bauxite extraction risk.

Glencore AG holds a dominant minority stake of more than 40% in Century Aluminum, a legacy of the 2014 Mt. Holly smelter acquisition and subsequent equity restructurings. The Swiss commodity trader also serves as a major alumina supplier and offtake counterparty. Institutional allocators weigh this relationship carefully — it provides supply-chain certainty but concentrates governance influence in a single strategic holder (per SEC filings, 2023).

Yes, significantly. The US Section 232 aluminum tariff, maintained at 10% on most imports since 2018, raises the domestic Midwest premium — the incremental price US smelters can charge above LME benchmarks. Century's domestic plants capture roughly 100% of that premium on their output, making tariff policy a material factor in earnings. Allocators model this as a binary political-risk variable alongside power-contract rollover risk.

Hawesville has been fully curtalled since July 2022, when elevated Midwestern power prices rendered the plant unprofitable. The facility represents approximately 250,000 tonnes of idled annual capacity. Century has not disclosed a timeline for restart, and the site's future depends on securing a new competitive power contract — a decision that would materially shift the company's production base and earnings profile.

The Grundartangi smelter in Iceland runs on 100% renewable hydro and geothermal power under a fixed-rate contract, producing aluminum with a carbon footprint roughly one-quarter of the global average. This green premium is increasingly saleable to European industrial buyers subject to carbon border adjustments. The facility diversifies Century's exposure away from US Midwest power markets and tariff policy, operating under Iceland's competitive Nordic grid pricing.

In February 2024, Century was selected for up to $500 million in Inflation Reduction Act funding to potentially build a new green-aluminum smelter in the Ohio or Mississippi River basins. The project remains in final negotiation and is contingent on securing a viable power supply. If built, it would be the first new US primary aluminum smelter of scale in decades, fundamentally altering the company's production base and capital structure (per Department of Energy, February 2024).

Century is a publicly traded industrial equity, but its return drivers — long-dated power contracts, tariff exposure, and a single-commodity conversion spread — make it behave more like a listed infrastructure-plus-real-options hybrid. The stock's elevated correlation with LME aluminum and US electricity prices can offer diversification against broader equity beta, but it also concentrates idiosyncratic operational and regulatory risk in one commodity.