Noranda Aluminum Holding Corp. is considering spending as much as $100 million on expansions that could add incremental capacity at its flat-rolling operations and double rod output.

"We are reviewing a number of projects that will add incremental capacity or free up capacity in each of our bottlenecks," president and chief executive officer Layle K. "Kip" Smith said in a conference call following the release of second-quarter earnings Wednesday.

 

He emphasized that the projects are still in the evaluation stage, and some might not come to fruition.

 

One idea is to spend roughly $30 million to adjust furnaces at its Huntingdon, Tenn., rolling facilities to process more scrap. It has two plants at Huntingdon—the West plant, with an annual capacity of 235 million pounds of foil and light-gauge sheet for the heating, ventilation and air conditioning (HVAC), semi-rigid container and automotive markets; and the East plant, with a capacity of about 132 million pounds per year of light sheet and foil from continuous cast coil for the HVAC, semi rigid container, and packaging markets.

 

"We will have the chance to be able to operate in the recycled space," Smith said.

 

Noranda, majority owned by private equity firm Apollo Management LLC and shipped 100 million pounds of flat-rolled products in the second quarter, is also considering refurbishing and reinstalling a mothballed flat-rolling mill.

 

The company bought the mill several years ago and is storing it disassembled at its Salisbury, N.C., site. The cost to refurbish this mill will be around $40 million, significantly lower than the $100 million to $120 million it would cost to purchase and install a new mill. "We have an opportunity to add meaningful flat-rolled capacity for a fraction of the cost of purchasing a new mill," Smith said.

 

If completed, this mill would produce 80 million pounds per year, he said, noting that the mill could be set up in Huntingdon, although AMM understands the location isn’t yet set in stone.

 

The third project would cost about $35 million, and involve purchasing and installing a third rod mill in New Madrid, Mo., where Noranda has an aluminum smelter that already feeds two other rod mills on site.

 

"If we go forward with this project, we would potentially double our annual rod capacity, while reducing cost and improving our energy utilization," Smith said.

 

The smelter, which is in the process of being expanded, supplies part of its output to the rod mills, with the remainder going to third-party customers, according to the company’s Web site. It is too early to say how those external sales might be affected by the installation of a third rod mill, a company spokesman said.

 

Noranda also is replacing a rectifier transformer at its New Madrid smelter and continues to expand its Saint Ann bauxite mine in Jamaica. These projects follow the company’s initial public offering in May last year, which raised $81.6 million.

 

Noranda’s shares hit an intraday high of $14.07 on the New York Stock Exchange Wednesday and closed the day up 0.2 percent at $13.38.