Aluminum smelting in Washington faces total collapse

In a recent government meeting, discussions centered on the future of tax preferences for aluminum smelters in Washington State, revealing a significant decline in their usage and relevance. Currently, four of the eight existing preferences are set to expire on July 1, 2027, while the remaining four have no expiration date. However, the legislative auditor reported that the estimated beneficiary savings for the 2023-2025 biennium is projected to be zero, indicating that these preferences are no longer utilized.

The closure of all aluminum smelters in Washington, including the last two operated by Alcoa in Wenatchee and Ferndale in 2016 and 2020 respectively, has contributed to this decline. The auditor noted that six of the eight preferences cannot be claimed by any new smelters due to statutory restrictions, and the two remaining preferences are unlikely to be utilized again. Over the years, beneficiary savings from these preferences have plummeted from $13.2 million in fiscal year 2015 to just $700,000 in fiscal year 2021, the last year any claims were made.

Factors contributing to the decline of aluminum smelting in Washington include increased production from other countries, rising energy costs, and an aging infrastructure. The meeting highlighted that since 2000, the number of smelters in the U.S. has drastically decreased from 23 to just four, reflecting a broader national trend.

In light of these findings, the legislative auditor recommended that the legislature allow the four preferences for aluminum smelters to expire and terminate the other four preferences related to power sellers and specific aluminum manufacturing activities. This recommendation underscores the need for a reevaluation of tax incentives in light of changing industry dynamics and economic realities.