Century Aluminum Plunges 9.5% After Iceland Smelter Failure
An electrical equipment failure has halted two-thirds of production at the company's key Grundartangi facility, interrupting a recent stock rally.
Shares of Century Aluminum Company (NASDAQ: CENX) fell more than 9.5% in Tuesday trading after the company announced a significant operational disruption at its Grundartangi smelter in Iceland, a critical facility for the producer. The stock dropped to $30.99, erasing a significant portion of its recent gains and falling from multi-year highs.
The Chicago-based aluminum producer disclosed that an electrical equipment failure forced the complete shutdown of one of the two potlines at the Icelandic plant. According to the , this single event is expected to curtail the smelter's total production by approximately two-thirds. The second potline at the facility remains fully operational, and no injuries were reported.
This sudden setback deals a blow to Century Aluminum, which had been benefiting from a highly favorable market environment. The company's stock had recently soared to a earlier in October. Investor optimism was fueled by a combination of global aluminum prices hitting three-year highs, supportive U.S. trade policies, and strategic investments aimed at boosting domestic production.
Management is currently assessing the extent of the damage and establishing a timeline for replacing the failed equipment. In its press release, Century stated it is working to "minimize the duration of the curtailment and the impact on its customers and suppliers." The company also noted that it expects the financial losses associated with the failure to be covered under its existing property and business interruption insurance policies.
The market's sharp, negative reaction underscores the significance of the Grundartangi smelter to Century's global operations. While insurance may cover the direct costs of repair and some lost profit, a prolonged shutdown could strain supply agreements and introduce significant uncertainty into the company's fourth-quarter earnings and forward-looking guidance for 2026.
Investors will be closely watching for updates on the situation. The company has announced it will provide more detailed information during its next quarterly earnings conference call, scheduled for November 6. Analysts on the call are expected to press for specifics on the repair timeline, the projected financial impact, and the potential for any force majeure declarations affecting customer contracts.
The incident interrupts a period of strong momentum for the U.S. aluminum producer. Earlier this month, the company's prospects were bolstered when , citing better-than-expected aluminum prices and the company's strategic position. Furthermore, Century has been making progress on restarting idle capacity at its Mt. Holly, South Carolina smelter, a move seen as a key part of its growth strategy.
With a market capitalization of approximately $3.2 billion, Century Aluminum remains a significant player in the global primary aluminum market. However, this operational failure in Iceland serves as a stark reminder of the inherent risks in heavy industrial operations and could weigh on investor sentiment until a clear path to full production is outlined.