Century Aluminum: A Strategic Play in the Aluminum Tariff Era

The U.S. aluminum industry is at a crossroads. With tariffs soaring to 50% under President Trump's Section 232 policy and global supply chains in flux, domestic producers like Century Aluminum (CENX) are positioned to capture unprecedented opportunities. The company's new smelter project—a first in half a century—could cement its role as a linchpin of U.S. industrial policy, national security, and the clean energy transition. Here's why investors should act now.

The Tariff Tsunami: Why CENX Benefits

The 50% tariff on imported aluminum, effective June 2025, is a game-changer. By shielding domestic producers from cheaper global competition, it creates a $10 billion annual opportunity for companies like Century. The tariffs have already reshaped trade flows, with Canadian and European producers diverting supplies to the U.S. to offset higher costs. But this isn't just about short-term gains.

The policy targets strategic vulnerability: the U.S. relies on imports for 85% of its aluminum needs, with China and Russia among top suppliers. By boosting domestic production, tariffs aim to reduce this dependence. Century's $500 million DOE grant—funded by the Inflation Reduction Act—to build its new smelter is a direct response to this imperative.

The Smelter's Strategic Triple Play

Century's new smelter, slated for the Ohio/Mississippi River Basin, is a masterstroke of timing and positioning:

1. Scale & Capacity: At 500,000 tons/year, it will double U.S. primary aluminum output. Crucially, 20,000 tons annually will be ultra-pure aluminum (P0303 grade), critical for defense applications like aircraft and missiles. This taps into a $12 billion annual market for strategic metals.

2. Green Credentials: The smelter aims to cut carbon emissions by 75% by 2030, using renewable energy for 25-75% of its power. This aligns with the Biden administration's push for “Buy Clean” policies, which prioritize low-carbon materials in federal procurement.

3. Job Creation: The project will generate 5,500 construction jobs and 1,000 permanent union roles, appealing to policymakers focused on reviving manufacturing hubs.

The DOE grant covers up to $500 million of costs, reducing Century's capital burden and lowering project risk.

Why the Timing Is Perfect

• Supply Chain Shifts: Post-pandemic and post-Ukraine-war geopolitics have accelerated “onshoring” of critical materials. Aluminum is vital for EVs, solar panels, and defense—a $200 billion market by 2030.
• Energy Costs: While U.S. electricity prices are high, Century's partnership with regional utilities to secure long-term clean energy contracts (at $290/tonne vs. Canada's $550/tonne) mitigates this.
• Stock Catalysts: The smelter's Phase 1 approval in 2024 and final site selection by 2026 could trigger multiple earnings upgrades.

The Financial Case for Aggressive Action

Century's Q1 2025 results underscore its resilience:
- Revenue hit $634 million, surpassing estimates.
- Net debt fell to $339 million, with liquidity improving 10% Y/Y.

The stock's beta of 2.7 signals volatility, but this is a high-reward asymmetry play. A successful smelter ramp-up could lift EBITDA by 300% by 2028, while risks like energy inflation or permit delays are priced into the current valuation.

Risks? Yes. But the Upside Outweighs Them

• Energy Costs: A wildcard, but the DOE grant and renewable partnerships reduce exposure.
• Tariff Reversal: Unlikely before 2026 elections, given bipartisan support for industrial policy.
• Execution: Building a smelter after 50 years requires flawless project management, but Century has a proven track record at its Hawesville plant.

Conclusion: Buy Now, or Miss the Aluminum Boom

Century Aluminum is a rare multi-decade bet on U.S. industrial revival. With tariffs acting as a permanent subsidy, a game-changing smelter, and demand from EVs and defense, this is a 10-bagger opportunity. Investors should act swiftly: Once the smelter's Phase 2 begins in 2026, valuation multiples will expand dramatically.

The clock is ticking. Century's stock is undervalued by 40% relative to its 2028 potential. Don't let this generational opportunity slip away.

Note: Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.