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Horsehead has 'increased expectation' it will close Beaver County plant this year

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By John D. Oravecz
Wednesday, Feb. 20, 2013, 12:21 p.m.

Horsehead Holding Corp. said Wednesday it has an “increased expectation” that its Beaver County zinc plant will close by the end of the year while it awaits a decision from Royal Dutch Shell plc on buying the site for a petrochemical plant.

The chemical arm of Shell has a June 30 deadline to buy land in Center and Potter. The company and Horsehead signed an extension of a purchase option in December.

Shell may build a multibillion-dollar ethane processing plant there and needs time to assess its suitability, a Shell spokeswoman has said, though she could not be reached Wednesday.

State leaders and others courted Shell officials and pitched the project as a potential economic boon. The plant would take ethane, a byproduct of gas drilling in the Marcellus shale, and convert it into the building blocks for plastics.

Horsehead issued fourth-quarter earnings, recording a $16 million charge to partially adjust the value of the Monaca plant before closing it. Horsehead will move its operations to a zinc manufacturing plant in North Carolina this year.

“Because of our progress in North Carolina, we've increased our expectation that we will be closing the (Monaca) facility down in 2013,” said spokesman Ali Alavi.

Shell officials haven't indicated to Horsehead that they are nearing a decision on the land purchase, he said.

Shell has more to study than when the parties entered into the purchase agreement last year, he said.

On a conference call with analysts, Horsehead CEO Jim Hensler said Shell is taking a close look at the project but did not elaborate.

A spokeswoman for Shell could not be reached.

“They're doing their due dilligence. As long their boots are on the ground here, we're happy,” said Beaver County Commissioner Tony Amadio, regarding Shell's progress.

Horsehead said it lost $11.2 million, or 25 cents a share, in the fourth quarter, compared with a loss of $12.7 million, or 29 cents a share, a year ago.

Excluding the writedown of the Monaca plant's value, hedges and gains on purchases, Horsehead said it had a profit of $900,000, or 2 cents a share, in the quarter versus a loss of $4.4 million, or 10 cents a share, in the fourth quarter of 2011.

Sales were $110.6 million compared with $109.1 million for the fourth quarter of 2011.

Despite lower zinc prices and the other expenses, “the underlying operating performance of our businesses continued to improve in the fourth quarter,” Hensler said.

Horsehead said its unit that recycles electric arc furnace dust processed 23 percent more despite lower steel industry output. Its zinc smelter output was 5 percent higher than during the fourth quarter of 2011 and 11 percent higher than during the third quarter of 2012.

Shipments of zinc products were up 10 percent compared to last year and 5 percent higher than the third quarter.

During 2012, the Monaca smelter produced 146,000 tons of zinc, the highest level in the company's history, Hensler said.

“Construction of our new zinc plant project in Rutherford County, N.C., continues to be on schedule for ‘first zinc' production in the second half of this year,” he said. The plant is estimated to cost $415 million.

John D. Oravecz is a staff writer for Trib Total Media. He can be reached at 412-320-7882 or

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