Greg Paolino steers a golf cart into one of the eerily quiet pot rooms at Kaiser Aluminum & Chemical Corp.s former Mead Works smelter and points to whats left of a once-hulking potline thats being dismantled and sold off, piece by piece.


Its a cold, foggy day, giving the cavernous factory a ghost-town feel, though its easy to remember it as loud and hot, its endless rows of carbon-and brick-lined smelting pots each pulsing with the 69,000 amps of electricity needed to transform powdered raw alumina into molten aluminum for pop cans and airplane skins.


At full production, there were 1,200 workers at this sprawling North Spokane industrial complex. Today, a small contingent of 50 people, from various contractors, goes about the gloomy but lucrative job of extracting the remaining value from the plant and preparing it for its next life.


A 12-year Kaiser employee, Paolino was hired last June by St. Louis-based Commercial Development Co., which bought the smelter from Kaiser in Bankruptcy Court for $7.4 million. His job is to sell off the plants assets, which are considerable. Theres some 13 million pounds of copper built into the potlines and conductive systemsworth about $16.5 million at todays strong copper prices. Theres also an estimated 5.5 million pounds of aluminumabout $4.5 million worthsome of it left in the bottoms of the plants 1,125 smelting pots when the Mead Works went idle for the last time.


The asset list goes on, and Paolinos eyes brighten as he talks about such salvage numbers and the future potential for the 1.6 million square feet of industrial space and 231 acres of industrial-zoned land there that CDC will market to new users.


He says the company doesnt yet know how much value ultimately will be extracted from the property, but that it will be substantial, adding with a smile, This is an extremely lucrative deal.


He turns solemn, however, during a quick, golf-cart tour of the complex, remembering what it once was and what it meant to a lot of Kaiser workers.


Its a sad state of affairs, but here we are, he says, driving around the virtually desolate campus. This place was old, but it once was one of the most efficient smelters in the world. They put a lot of time and money and effort into making it that efficient. Its too bad.


Finding value


Kaiser hasnt operated the smelter since late 2000. It was built as a wartime facility in 1942, and bought, along with the Trentwood rolling mill, by U.S. industrialist Henry Kaiser later that decade. Kaiser Aluminum became a mainstay employer in Spokane, eventually having an annual payroll in the mid-1990s of more than $150 million here.


Stagnant aluminum prices, stiff competition, and, ultimately, rising electricity costs prompted financially troubled Kaiser to close the smelter, along with its smaller aluminum smelter in Tacoma. The company filed for protection from creditors in U.S. Bankruptcy Court in February 2002. It still operates the Trentwood rolling mill, which it has refocused away from the aluminum-can market and back into higher-margin, more exacting production for aerospace and other industrial uses.


CDC specializes in buying abandoned industrial properties, most often ones with environmental problems or other impairments, and salvaging the properties remaining assets and marketing them for new uses.


Among the properties it has acquired are former plants of Kraft General Foods, General Motors, Caterpillar, and G. Heilman breweries, according to its Web site. It also has bought 46 retail facilities in 10 states and 13 chemical facilities in nine states, the site says.


Paolino says the Mead Works is CDCs first smelter purchase, but asserts that the company is uniquely qualified to get the most out of the property.


In addition to Paolino, CDC hired from Kaiser an electrical maintenance superintendent named Ken Hoff, who now oversees much of the operational side of the salvage operation. Their employment, says Paolino, is for an undetermined length. The two also have hired six former Kaiser hourly workers to help with the project, giving CDCs contingent here eight people.


In addition, CDC has hired two contractors that are assisting with demolition of the potlines. One employs about 25 people on site and the other has about 15 here, Paolino says.


Selling off assets isnt new to Paolino, who previously was sales manager for surplus assets at Kaisers Mead Works. He worked in Tacoma for 17 months dismantling the companys smelter there before the property was acquired by the Port of Tacoma.


He returned to Mead about a year ago, and says hes already sold off about between $4.5 million and $5 million in assets here.


Theres far more than just copper and aluminum to salvage at the plant. He estimates that theres some 64,000 tons of steel that can be soldwhich these days commands a high priceas well as thousands of tons of raw materials such as calcined petroleum coke and cryolite. There are rows of pallets filled with unused insulating bricks, copper rods, and crushed anode butts, which are used for electrical conductivity.


Much of the raw materials available for sale can fetch market prices, Paolino says, while equipment and toolsdown to belt sanders and metal latheslikely will go for as little as 15 cents to 25 cents on the dollar. Some have very specialized uses, such as the calcined coke used in the production of the carbon anodes that provide the electrical charge in smelting pots, and the cryolite used as an ingredient, along with alumina, in making pure aluminum. Those materials are being sold to other aluminum manufacturers, he says.


CDC also recently sold all of the plants 103 transformers, some the size of a small office room, to a company that rebuilds them for sale or salvages them for parts.


Paolino is marketing the salvage items both directly to end users and through brokers, dealers, and scrap yards, and says the buyers are located all over the world. Buyers must haul away their purchases on their own, he says.


Paolino has used his own knowledge and contacts in the industry to find buyers, and CDC took ads out in the Wall Street Journal, USA Today, and American Metal Market.


One production facility at the smelter that wont be dismantled, at least for now, is a former carbon plant where 420-pound carbon anodes were made. Kaiser had spent about $61 million in the 1990s to upgrade and modernize that plant, and CDC believes its worth more intact than sold off in pieces. It hopes to sell the carbon plant to a company that wants to restart it, Paolino says.


Early next month, a Pittsburgh-based company called Asset Auctions will hold a live auction here for CDC, and a representative of that auctioneer is already on site full time, marshaling assets for display, he says. A full catalog of items is being prepared for the Dec. 7-9 auction, he adds.


Were all learning as we go, Paolino says. This could stretch well into next spring.


After salvaging is complete, the property will be cleaned up and marketed to new users, although its not clear yet what redevelopment might occur on the property or whether CDC will retain ownership of all or parts of the complex. He says the company is consulting with a commercial real estate brokerage here about those options.


Its prime industrial land, and theres not much of it on the North Side, says Paolino.


He adds that the property is close to the proposed Hawthorne Road interchange of the future north-south freeway, and has nearly 15,000 feet of railroad track running through it.


In addition to the massive potline buildings, which will be completely empty when salvaging is complete, the complex includes warehouse space, office space, lab space, and maintenance areas.


He says he already has received calls from businesses interested in using parts of the complex for storage or distribution activities.


We think theres some strong potential, Paolino says.


Kaiser still owns about 400 acres of undeveloped land north of the Mead Works, some of which it leases to Ray Turf Farm, a longtime sod producer here. That lease runs through next year, says Kaiser spokesman Scott Lamb, and Kaiser has said before that it would like to change the zoning on that land from heavy industrial to a designation or designations that would allow for mixed uses.


The company also owns a small, three-acre parcel just east of the smelter property that is whats left after it sold a larger parcel to the Washington state Department of Transportation for the north-south freeway project.


Also not included in the 231-acre smelter property sold to CDC were two large dumping areas where spent pot liners and sludge were piled. Lamb says Kaiser has entered into a settlement agreement with the Washington state Department of Ecology and the U.S. Environmental Protection Agency to establish a custodial trust that will oversee cleanup of those areas. Kaiser funded the trust with $2.25 million in cash and an $18 million insurance policy, and transferred ownership of the land to the trust.