Efforts to bring manufacturing back to the United States and to also win the AI race have left some of the country’s biggest companies competing for the same resource: cheap electricity.
The recent sale of an idled aluminum smelter in Kentucky to a data center developer shows how tricky that competition can be in middle America — particularly in coal country.
Century Aluminum closed the Hawesville smelter along the Ohio River in 2022. It had been operating since 1969. The company cited the rising price of natural gas in the aftermath of the Russian invasion of Ukraine.
Century never restarted the Kentucky plant, even as the domestic aluminum supply dwindled. Instead, it secured a grant of up to $500 million from the Biden administration to build a new aluminum smelter that would be more efficient. In 2024, Century CEO Jesse Gary said he was eyeing northern Kentucky for the new plant, and it was welcome news to the state economy.
In a shocking turnabout for Kentucky, Century last month announced it would build its new plant in Oklahoma instead, in partnership with a company based in Dubai, United Arab Emirates. The company then announced the sale of the Hawesville smelter to TeraWulf, a data center developer looking for a site with a power contract and electricity infrastructure.
Deep-pocketed tech companies backed by investor enthusiasm for AI development have shown they’re willing to pay the cost of pricey power contracts. Some are looking to build their own power plants to fuel their data centers. On the other hand, aluminum companies operate on thin margins. They need predictable and low electricity costs to thrive.
Democratic Gov. Andy Beshear and other Kentucky officials had hoped that Century’s new smelter would replace lost jobs and be part of a broader manufacturing revival. Instead, the data center is expected to produce just a fraction of the jobs and eat up more demand on the electric grid.
“The news from Century Aluminum is disappointing,” said Beshear spokesperson Scottie Ellis. “The governor helped the company secure a significant grant based on an application saying the project would come to Kentucky.”
Making aluminum — a metal crucial for everything from cars to solar panels and power lines — requires a huge amount of near-constant electricity. That makes smelters particularly sensitive to energy price shocks.
According to a 2025 report by Grid Strategies, the industrial and manufacturing sector represent 30 gigawatts of the grid’s projected growth through 2030, about 20 percent. Data centers, however, are projected to add three times that demand, about 90 GW.
“It’s starting to look like the only industries that are able to access the large power contracts are the hyperscalers to build data centers,” said Annie Sartor, aluminum campaign director for Industrious Labs, an advocacy group focused on decarbonizing heavy industry.
“There seems to be bipartisan interest in reshoring and revitalizing the aluminum industry,” Sartor said. “But unless action is taken to support electricity for heavy industry, it’s not going to be able to compete.”
Oklahoma’s gain
The idling of the Hawesville smelter was part of a rough stretch for the aluminum industry, which saw three plants close in less than two years. That included the 2024 shuttering of a Missouri smelter that had the capacity to produce up to 30 percent of the country’s supply.
According to the U.S. Geological Survey, only three companies operate six domestic primary aluminum smelters. Of those, only two operated at full capacity in 2025. That means the U.S. imports roughly half of its aluminum, mostly from Canada.
The Biden administration used its landmark economic stimulus bills to offer tax credits for aluminum production and grants to companies developing new plants. The Trump administration, however, reversed many of those incentives in favor of a hard-edged trade policy. Trump put a 25 percent import tariff on aluminum and derived products, then doubled it to 50 percent in June for most countries.
Under President Donald Trump, DOE officials killed most of the existing grants but preserved the one for Century. It’s unclear whether any conditions for that grant have changed.
Still, the economics on the ground didn’t change. Century ended up teaming with Emirates Global Aluminum, the Dubai-based industrial giant that was already exploring opportunities for its own smelter on U.S. soil. The two partners chose a site in Oklahoma near the Port of Inola on the Verdigris River for what will be the nation’s first new smelter since 1980.
Not only will that site offer relatively easy transportation because of the port infrastructure, the partners said they anticipated getting a favorable long-term power supply contract. Oklahoma had the fourth-lowest average retail electricity price in 2024, according to federal data, and the state’s grid gets more than 40 percent of its power from low-cost wind.
John Budd, CEO of the Oklahoma Department of Commerce, said in an interview that the low price of electricity was a key selling point, as was the proximity to an inland port and the opportunity to sell aluminum to nearby aerospace and tech companies. And while Budd acknowledged that the state’s electric grid could also make it a prime site for data centers, he said there’s a focus on using it to bring manufacturing.
“Data centers are part of the overall ecosystem, and we also very much believe in job creation,” Budd said. “The importance of these manufacturing facilities is that they provide jobs for regular Oklahomans.”
The DOE also touted the announcement. Energy Secretary Chris Wright said in a statement that the project “could not have been realized without President Trump’s commitment to revitalizing this country’s manufacturing base and reducing our reliance on foreign suppliers.”
Kentucky’s loss
The loss of two smelters represents a missed opportunity.
“We’ve got a trained workforce used to dealing with heavy industry,” said Lane Boldman, executive director of the Kentucky Conservation Committee.
TeraWulf, which started as a cryptocurrency miner before expanding into data center development, said in a release that redevelopment of the Hawesville plant would creat short-term construction jobs and long-term skilled employment.
According to federal filings, TeraWulf will gain access to high-voltage transmission lines, an energized substation and a connection to the regional transmission network. The former smelter has approximately 480 megawatts of power available with the potential for the company to add more capacity.
It’s unclear which AI companies might use the site once it’s developed by TeraWulf. The company did not respond to a request for comment. The Hawesville site joins a portfolio of four other data center developments that total roughly 2.8 gigawatts of power.
Michelle Bloodworth, president of the pro-coal trade group America’s Power, said Hawesville makes sense for a data center that needs constant, consistent power. Coal provides roughly two-thirds of the state’s electricity generation (gas plants are a further 26 percent), and it has access to larger power markets that can help keep prices stable.
Crucially, Bloodworth said, lawmakers in Kentucky have passed legislation in recent years that makes it harder to retire any power plants, but especially coal. With the industry also getting support from the Trump administration, large power plants like the Ghent Generating Station can continue operating.
“When someone like TeraWulf comes in, the state’s in a better position to compete,” Bloodworth said.
Electricity prices in Kentucky are lower than all but 11 other states. But they’re still higher than those in Oklahoma.
Boldman of the Kentucky Conservation Committee said that should motivate the state to add more renewable energy. Kentucky should be able to land high-energy businesses through clean energy, too.
“The bottom line is that it’s communities that lose out,” Boldman said. “We can quibble about what kind of fuel is best, but the end result is that Kentucky is losing out right now.”
