Tax credit benefits Century Aluminum's bottom line

Century Aluminum got a boost from the Advanced Manufacturing Production Credit. Late last month, the Department of Treasury finalized the Section 45X tax break under the Inflation Reduction Act, which promotes U.S. production of critical minerals, including primary aluminum.

CEO Jesse Gary said by including carbon and other operating supplies, Century Aluminum expects its total full year 2023 benefit to be $79 million and 2024 benefit to be about $73 million.

“If alumina is ultimately included as eligible, we expect each of those amounts to increase by another $30 million or so, totaling over $100 million in benefit on an annualized basis,” Gary said during the company’s third quarter earnings call. “Please note, these production tax credits for critical minerals do not phase out over time. It would be increased by any additional production that we may bring online in the U.S. The effect of these credits is to significantly increase the quality and competitiveness of Century’s businesses.”

Overall, Century Aluminum posted net earnings of $47.3 million in Q3’24, reversing a $2.5 million loss the previous quarter.

But the Chicago-based primary aluminum producer warned of headwinds.

“Strong global demand, continued supply-side challenges and supportive macroeconomic policy in China and the West led to rising aluminum and alumina prices in the third quarter,” Gary said. “With bauxite and alumina supply chains facing a number of challenges around the world, we are thrilled to have our own strategic supply of bauxite and alumina from our Jamalco operations following the acquisition last year.”

Hurricane Beryl hit Jamaica in July, damaging operations at Jamalco’s Rocky Point port.

Century said global aluminum demand has already been at record levels in 2024, driven by trends toward electrification and light weighting.

“Overall, we estimate that 2024 global demand growth of 3% will accelerate further in 2025 as Western markets begin to improve on the backs of central bank action and Chinese demand growth continues to accelerate as stimulus programs and funds are dispersed,” Gary said.

Meanwhile, aluminum supply remains challenged, with China approaching its 45 million ton production cap and limited announced new projects outside of China, Gary added.

“We believe demand growth will continue to outpace supply in 2025 and for years to come, moving the market back into deficit. With inventories already near multi-year lows, these supply deficits should continue to create a favorable aluminum price environment in the coming years.”