Past posts have preached a look at the long-term and investing; not where the market is, but where one thinks it will be down the road. Some industries and markets are better suited in this regard than others. An investor that can find companies to fit this long-term strategy is one that will profit at some point. It really comes down to doing the research, investing and forgetting about the investment for a certain amount of time.
Century Aluminum Co., a primary aluminum production company, produces molten aluminum, billet and other value added aluminum products. Additionally, the company holds a 50% stake in the Gramercy alumina refinery of Gramercy Louisiana, capacity in Iceland and bauxite interests in Jamaica.
Although the company has been affected by the same economic conditions that a majority of the world’s companies are, it does seem that there may be an opportunity for investment. First quarter 2009 did not show any positive results, but does offer a glimmer for the long-term investor. Aluminum is a base metal that is not going to stay in a slump in any sense of the word. The ability to buy and hold is the key to this particular commodity, and an ability that could pay off in spades as the economy starts to turn. As of late, the company has not been able to obtain favorable power rates for its Hawesville smelter, contributing to a first quarter loss of $114 million. The operation in question has a capacity of 250,000 tonnes of primary aluminum through 5 potlines.
Although the company is in the same “boat” that most of the world’s companies are in, it has taken steps to make sure that it will be a leading aluminum company as the world’s economy exits from the worst conditions it has faced in decades. Production has been cut to reflect this scenario, although the Iceland smelter has seen a slight production up-tick through the quarter. Century Aluminum has taken solid steps to trim costs and production in difficult times; it may well be an opportunity as conditions improve.
Let us hear your thoughts below: