Kaiser probe links plant explosion to power

greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread


NEW YORK, Aug 13 (Reuters) - Kaiser Aluminum & Chemical Corp., the operating unit of Houston-based Kaiser Aluminum Corp. (NYSE:KLU - news), said Friday its continuing investigation points to a power distribution interruption as the cause of the July 5 explosion at its Gramercy, La., alumina refinery.

``Our own investigation is ongoing,'' Kaiser spokesman Scott Lamb said Friday. ``This is a preliminary finding.''

The explosion injured 24 employees, six of whom were hospitalized. Two employees are still hospitalized but neither is in critical condition. The plant has been shut since then.

Kaiser said the power interruption caused process flow pumps to stop operating.

``This power interruption could not be remedied in a timely manner and resulted in an overpressure situation and explosion...'' Kaiser said in a statement released Friday.

The U.S. Mine Safety and Health Administration also is conducting an investigation of the explosion, Kaiser said.

George Haymaker, Jr., Kaiser's chairman and chief executive officer, said, ``This has been a difficult experience, and we are taking steps to prevent such an incident from ever occurring again in a Kaiser facility.''

The Gramercy plant processes bauxite to make alumina, the raw ingredient for aluminum smelters. This plant produces one million metric tons per year of alumina.

``Kaiser intends to rebuild the Gramercy facility, assuming we are able to reach acceptable agreement with various stakeholders on matters related to the plant's competitive position,'' Haymaker said.

``Based on what we currently know, we continue to believe that the financial impact of this incident will be largely offset by insurance coverage,'' he added.

Maxxam Inc.(AMEX:MXM - news) of Houston directly and indirectly holds about 63 percent of Kaiser. On Friday, Maxxam stock rose 7/16 at 61-15/16 on the American Stock Exchange, a division of Nasdaq. Kaiser stock added 3/16 to 9-1/2 a share on the New York Stock Exchange.

-------------- So a simple power failure caused a factory to explode. Gee, kinda makes you wonder how many of these will be blowing up in January...


-- TECH32 (TECH32@NOMAIL.COM), August 14, 1999


Ah! isn't that interesting. This is from the SEC 10-Q, this is what they say there. I noticed it because of the "plant's on-site power house that caused process flow pumps to cease operating." Could be a contingency test or maybe not. Would be a critical legal situation if it was Y2K involved.

You know the companies that have problems aren't afraid of the public reaction as much as the legal reaction.



           & nbsp;   On July 5, 1999, KACC's Gramercy, Louisiana alumina
          refinery was extensively damaged by an explosion in the
          digestion area of the plant.  Approximately 24 employees were
          injured in the incident, several of them severely.

           & nbsp;   The cause of the incident is under investigation by KACC
          and governmental agencies.  KACC's continuing investigation
          suggests that the incident was caused by a power distribution
          interruption involving the plant's on-site power house that caused
          process flow pumps to cease operating.

           & nbsp;   KACC has also identified certain other conditions that
          were present at the time of the incident and continues to
          investigate these and other matters.

           & nbsp;   As previously announced, KACC expects that production at
          the plant will be curtailed for many months.  KACC has
          declared force majeure with respect to certain of its sales
          and purchase contracts, but continues to work with customers
          to assist them in securing alternative sources of alumina.

           & nbsp;   More than 30 lawsuits have been filed against KACC
          alleging, among other things, property damage and personal
          injury as a result of the incident.  In addition, a claim for
          alleged business interruption losses has been made by a
          neighboring business.  The aggregate amount of damages sought
          in the lawsuits and other claims cannot be determined at this

           & nbsp;   KACC has significant amounts of property damage, business
          interruption, liability and workers compensation insurance
          coverage relating to the Gramercy incident.  Deductibles and
          self- retention provisions under  the insurance coverage for the
          Gramercy incident total $5.0 million.

           & nbsp;   The incident will cause KACC to incur incremental costs
          for clean-up and other activities in the second half of 1999
          and will cause the affected operations to incur certain operating
          losses until production can be restored.  Further, depending
          on the outcome of the ongoing investigations by various
          regulatory agencies, KACC could also be subject to certain
          fines or penalties, which may not be covered by insurance.
          However, based on what is known to date, the Company currently
          believes that the financial impact of this incident (in excess
          of the deductibles and self-retention provisions) will be
          largely offset by insurance coverage.

           & nbsp;   The accompanying consolidated financial statements as of
          and for the periods ended June 30, 1999, do not include any
          provisions for the Gramercy incident.

           & nbsp;   KACC has announced that its intention is to rebuild the
          Gramercy facility assuming that it is able to reach acceptable
          agreements with the various stakeholders to ensure the plant's
          competitive future.  KACC hopes to have the plant operating
          at a reduced production level in mid-2000 and to have the plant
          completely operational by the end of 2000.  However, there can be
          no assurance that the Gramercy facility will be made operational
          on this schedule.

-- Brian (imager@home.com), August 14, 1999.

Moderation questions? read the FAQ