Bankrupt US zinc recycler Horsehead Holding Corp continues to assert in a newly filed second amended disclosure statement that its idled $550 million zinc plant in Mooresboro, North Carolina, has "no value," and it would take three years and another $117 million to be brought up to capacity.
As arguably Horsehead's most potentially valuable asset from the standpoint of its creditors, Mooresboro has been in the spotlight since the Pittsburgh-based company filed for Chapter 11 bankruptcy reorganization February 2 in the US Bankruptcy Court for the District of Delaware.
Horsehead's claims that Mooresboro -- idled shortly before the company filed bankruptcy and beset with operational, production and equipment problems since operations started in May 2014 -- is essentially worthless have frustrated creditors who have demanded more answers about the facility.
Judge Christopher Sontchi recently approved Horsehead's request to hire Mississauga, Ontario-based Hatch Associates Consultants to prepare a report on how much it would cost to "to bring the Mooresboro facility back online and fully operational." The report is expected to be completed sometime in August.
Soon after the plant opened, Horsehead said in the disclosure statement, "it was discovered that the bleed-treatment section of the facility was undersized, causing a bottleneck to production [and] electrolyte quality deteriorated, causing significant corrosion to electrodes in the cast house due, in part, to poor control of solids carryover into the solvent extraction units combined with equipment issues related to faulty organic filters," among other issues. On July 8, 2014, Horsehead said Mooresboro would undergo a temporary outage to repair, upgrade and replace some of the mixing components in a series of tanks.
Following the outage, operations resumed in August 2014. But two months later, the company reported that while numerous improvements were made to several unit operations at the plant during second-quarter 2014, production during the quarter was impeded by operational issues associated with controlling the removal of solids in the clarifier unit downstream of the leaching process.
In March 2015, Horsehead said it experienced "intermittent equipment reliability issues, particularly with some key pumps, which were further exacerbated by extreme cold weather conditions at the end of year 2014 and beginning of 2015."
Horsehead then reported May 8, 2015, that recent production at Mooresboro was lower than expected primarily because of an extended period of exceptionally heavy rains, which filled the plant's containments and holding ponds, requiring the company to process excess water rather than produce zinc.
According to Horsehead, Mooresboro produced just 4,100 mt of zinc in the Q2 2015, despite having nameplate capacity of 155,000 mt/year.
In Q3 2015, the plant's output edged up a bit, to 9,700 mt but Horsehead advised at the time that completion of the ramp-up to full zinc production "could not be predicted with any degree of certainty."
Despite the plant's checkered past, Horsehead added it continues to believe that, at full capacity, Mooresboro would be capable of producing more than 155,000 mt/year, and up to 170,000 mt/year with certain modifications, but that would take a lot more time and money.
As a result, Horsehead's new disclosure report attributes no value to the plant, assuming instead that it will be idled.
