Can Century's Mt. Holly Restart Reach Full Capacity on Schedule Given US Power Cost Volatility?

Century Aluminum (CENX) is in the midst of restarting the final 25% of curtailed capacity at its Mt. Holly smelter in Goose Creek, South Carolina — a project announced in August 2025 with a target of full production by end of June 2026. The $50 million investment would lift Mt. Holly's annual output from ~172,500 tonnes to its full ~230,000-tonne capacity, boosting US aluminum production by roughly 10%. But with power representing the single largest input cost for any smelter, the question is whether volatile US electricity prices could derail the timeline or erode the economics.

The Restart Plan: Where Things Stand

Management laid out the timeline on its Q3 FY2025 earnings call (November 2025): Mt. Holly would begin producing incremental units in Q2 2026 and complete the restart by end of June 2026. By the Q4 FY2025 call in February 2026, CEO Jesse Gary reiterated the target, stating Century expects "full production capacity in summer" and projecting FY2026 shipments of approximately 630,000 tonnes across all assets.

The FY2025 10-K filing (March 2026) confirmed: "In August 2025, we began a project to restore the remaining curtailed capacity at Mt. Holly. We expect to achieve full production by end of June 2026."

The Power Cost Question

Mt. Holly's entire electrical supply comes from the South Carolina Public Service Authority (Santee Cooper) under a cost-of-service based contract. This is a critical detail. Unlike market-rate industrial power agreements — where prices fluctuate with natural gas, grid congestion, and seasonal demand — cost-of-service contracts pass through the utility's actual generation costs plus a regulated return. This structure provides significantly more cost predictability than merchant power exposure.

The original contract ran through December 2026 at 295MW. In October 2025, Century extended the agreement through 2031 with sufficient capacity for full production. The extension was a strategic prerequisite: without long-term power certainty, the restart economics would not pencil.

That said, cost-of-service does not mean cost-immune. Santee Cooper's generation mix includes coal, natural gas, nuclear, and hydro. Fuel price swings — particularly in natural gas — flow through to industrial rates, albeit with a lag. Century flagged this in its Q1 FY2025 call, noting that "polar vortex-linked energy costs" created headwinds to adjusted EBITDA that quarter. US industrial electricity prices have been volatile over the past two years, driven by data center demand growth, grid congestion in the Southeast, and natural gas price swings.

For context, the two largest regulated utilities in the Southeast — Duke Energy (DUK, $101B market cap) and Southern Company (SO, $108B market cap) — have both reported rising generation costs and increased capital investment to meet surging power demand. If Santee Cooper faces similar cost pressures, those would eventually pass through to Mt. Holly's power bill.

Financial Capacity to Absorb Volatility

Century's balance sheet provides a buffer. As of Q4 FY2025:

*Management reported adjusted EBITDA of $171M for Q4; GAAP EBITDA was $26.9M due to non-cash items.

The company guided FY2026 CapEx at $115–125 million (including the Mt. Holly restart) and Q1 FY2026 adjusted EBITDA of $215–235 million — a significant step-up reflecting higher aluminum prices and improved operations. With cash of $135.6 million and declining debt, the $50 million restart investment appears well-funded.

Importantly, Century guided that cash interest expense will decline in 2026 following a $400 million refinancing in Q2 FY2025, freeing incremental cash flow to support the ramp.

Key Risks to the Timeline

1. Power cost escalation. While the Santee Cooper contract provides structural protection, a sustained spike in natural gas prices or unexpected generation outages could raise Mt. Holly's per-tonne cost above breakeven assumptions. Management acknowledged in the 10-K that "changes in these inputs may also affect the economic viability of restarting the remaining curtailed capacity at Mt. Holly, and we may decide at any time to discontinue the restart project."

2. Operational execution. The restart involves re-energizing potlines that have been idle since 2015. Century experienced "operational instability" at Mt. Holly in late 2024 and Q1 2025, which temporarily reduced output even at 75% capacity. The Q3 FY2025 earnings call noted production "fell short" before the issue was resolved.

3. Aluminum price dependency. The restart's IRR is anchored to LME aluminum prices (recently ~$2,600/tonne) and Midwest premiums (which have been elevated due to Section 232 tariffs). A sharp drop in either would pressure the economics regardless of power costs.

4. Grundartangi distraction. Century's Iceland smelter suffered transformer failures in September–October 2025, cutting production by two-thirds. While Grundartangi is expected to return to near-full capacity by end of July 2026, management bandwidth and capital allocation could be stretched across two simultaneous ramp-ups.

What to Watch

1. Q1 FY2026 results (May 2026): Management's updated commentary on restart progress and any cost overruns will be the first real checkpoint. The $215–235M EBITDA guide implies strong underlying economics.

2. Incremental tonnage disclosure: Look for Mt. Holly-specific shipment data in Q2 FY2026. Any delay in "incremental units" beyond April–May 2026 would signal timeline risk.

3. Santee Cooper rate filings: South Carolina utility rate proceedings will signal whether cost-of-service charges are trending higher. Rising base rates would directly impact Mt. Holly's cost structure.

4. LME aluminum and Midwest premium trends: If LME falls below $2,200/tonne or Midwest premiums compress significantly, watch for management commentary on restart continuation.

Bottom Line

The Mt. Holly restart appears on track for its June 2026 deadline. The extended Santee Cooper contract through 2031 at cost-of-service rates provides meaningful insulation from the worst of US power price volatility — but does not eliminate it. Century's strengthening balance sheet ($135.6M cash, declining debt) and robust EBITDA trajectory ($215–235M guided for Q1 alone) suggest the company can absorb moderate cost headwinds without jeopardizing the timeline. The bigger risks are operational execution on the potline restart and macro-level aluminum price exposure. Investors should focus on Q1 and Q2 FY2026 earnings calls for tonnage data confirming the ramp is proceeding as planned.