Scriba, N.Y. – Novelis Inc. says its cash flows will take a hit of up to $650 million just from the first of three fires that hit its massive aluminum plant in Oswego County in the past two months.
In addition, the company said the first fire cost it at least $21 million in repair and other costs.
And those costs are likely to go even higher when the damage caused by two subsequent fires at the plant is calculated.
That’s the bad news.
The good news is the company says it has insurance that will largely cover the losses from the Sept. 16 fire, which shut down the plant’s hot mill. That’s where blocks of aluminum begin their transformation into metal sheets for the automotive industry.
Novelis disclosed the financial damage in an earnings report for the three months that ended Sept. 30.
The report does not take into account damage from a small fire Oct. 10 and another large fire on Nov. 20, so the numbers will likely go higher.
The Oct. 10 fire occurred during roof repair work and was quickly extinguished, according to Novelis.
The Nov. 20 fire, on the other hand, took seven hours to extinguish. It started in the hot mill during repairs and spread into the plant’s roll shop, according to dispatches from the Oswego County 911 Center.
Aerial footage shot by syracuse.com | The Post-Standard during the Nov. 20 fire showed flames and heavy smoke coming from the hot mill’s recently repaired roof.
According to the company’s quarterly earnings report, lost sales resulting from the first fire will slash its cash flow by $550 million to $650 million in the second half of its fiscal year. The company also anticipates a $100 million to $150 million impact on adjusted earnings before interest, taxes, depreciation and amortization.
However, the company said it is insured for property damage and business interruption losses, subject to deductibles and policy limits.
“We expect these impacts to be largely recoverable through insurance in future periods,” it said.
Novelis estimated that it incurred $21 million in expenses from the cost of repairs, cleanup and other charges related to the Sept. 16 fire. The estimate reflected losses through Sept. 30.
The company said it expected to incur additional losses related to repairs, cleanup, idle employees and other costs related to the fire until operations are fully restored at the facility.
It said it will report how much of those losses will be covered by insurance payments when they can be “reliably estimated.”
Novelis, one of the world’s biggest suppliers of aluminum, reported earning $163 million in its second quarter, a 27% gain over the $129 million it earned in the same quarter last year. However, the company said that excluding special items, earnings decreased 37% year-over-year to $113 million, primarily due to tariff impacts and higher aluminum scrap prices.
The company’s plant in Scriba, east of the city of Oswego, supplies about 40% of the aluminum used by domestic automakers. It also makes aluminum for the beverage can industry.
The plant employs 1,150 people, making it Oswego County’s largest manufacturer.
As substantial as the losses from the Sept. 16 fire have been to Novelis, the blaze caused even greater losses to the plant’s biggest customer, Ford Motor Co.
In its third quarter earnings report released Oct. 23, the automaker said its 2025 adjusted earnings before interest and taxes will take a $1.5 billion to $2.0 billion hit from the disruption the fire has caused to its production of F-150 and other vehicles.
Prior to the Nov. 20 fire, Novelis reported major progress in reaching its goal of reopening the hot mill in December. It said major reconstruction milestones had been achieved, including completion of new roof trusses, columns, roof decking and ductwork, while critical cable, conduit and switchgear work continued.
A day after the Nov. 20 fire, Ford and Novelis announced that the plant’s cold mill and heat treatment operations were back up and running, allowing the facility to finish processing aluminum that has gone through initial processing elsewhere in its global network and at industry peers.
No one was injured in any of the fires.
No cause has been given for the fires. Oswego County Fire Coordinator Shane Laws said Monday they remain under investigation.
Prior to the last fire, Novelis said it expected to restart its hot mill in December. Julie Groover, a spokesperson for Novelis, told syracuse.com | The Post-Standard via email on Tuesday that the company had no update to share regarding the cause of the fires or whether the latest one will delay the restart of the hot mill.
Clinton Mora is a reporter for Trending Insurance News. He has previously worked for the Forbes. As a contributor to Trending Insurance News, Clinton covers emerging a wide range of property and casualty insurance related stories.