Sherwin Alumina's top executive estimates it will cost about $7.95 million to maintain a bauxite refining waste disposal site containing toxic "red mud" over the next three years at the bankrupt company's recently closed 1.65 million mt/year refinery near Gregory, Texas.
In a Tuesday filing with the US Bankruptcy Court for the Southern District of Texas in Corpus Christi, Kent Britton, CEO of the Glencore subsidiary, said the Copano disposal facility is located on about 11,000 acres, including 8,000 acres of farmland and roughly 3,100 acres dedicated to disposal of the so-called red mud.
The Texas Commission on Environmental Quality has asked the court to order Sherwin to convene a "global mediation" to determine who will pay for closing and/or upkeep of the disposal site.
The TCEQ said it is concerned because Sherwin, which filed for Chapter 11 bankruptcy reorganization on January 11 and is in the process of going out of business, lacks sufficient funds to address the Copano cleanup issue.
Britton estimated maintenance costs for the facility will be about $2.8 million/year in both 2017 and 2018 before decreasing to $2.35 million in 2019.
"It is my opinion that, to a reasonable degree of expert certainty, maintaining the Copano disposal facility can be accomplished at an average cost of approximately $2.6 million per year for each of 2017, 2018 and 2019," he said.
Historically, both Sherwin and its predecessor at Gregory, Reynolds Metals, used the Copano facility to dispose of red mud produced at the refinery. The facility consists of four beds that were constructed by Reynolds through the creation of compacted earthen embankments that contain the red mud, which TCEQ says becomes corrosive and may cause irritation to the mucus membranes of humans when it becomes moist and blows from the site.
According to Britton, the red mud must be continually enhanced by applying organic material, such as hay, or landscaping yard material in addition to sewage sludge to reduce the amount of dust when the mud's surface becomes dry.
In addition to continued treatment, the mud beds will also require inspections, groundwater monitoring, "and various reporting to ensure the success of the closure plan," Britton added.
The refinery was closed in September. The court has scheduled a December 19 hearing on Sherwin's latest disclosure statement that, if approved, could result in the company exiting bankruptcy by the end of December.
In April, Corpus Christi Alumina, an affiliate of Commodity Trading, Sherwin's senior secured lender, submitted the highest bid of $54.5 million to acquire all of Sherwin's main assets, including the refinery.
