Alcoa Curtailing 12 Percent of Smelting Capacity After Tough Fourth Quarter
New York-based Alcoa will close or curtail approximately 531,000 metric tons, or 12 percent of its global smelting capacity, to lower the company’s costs and improve its competitiveness. The world’s largest aluminum maker reported a fourth-quarter loss of $191 million, down sharply from a profit of $258 million the year earlier.
Aluminum prices have fallen more than 27 percent from their peak in 2011, while raw material costs have accelerated. “These are difficult but necessary steps to improve Alcoa’s competitiveness, preserve and grow shareholder value and protect jobs in the rest of the Alcoa system,” says Alcoa Chairman and CEO Klaus Kleinfeld.
The company’s plan includes the permanent closure of its smelter in Alcoa, Tenn., which was curtailed in 2009, and two of the six idled potlines at its Rockdale, Texas, smelter.
Additionally, Alcoa will curtail operations at three European aluminum smelters, the company’s Portovesme, Italy, and La Coruña and Avilés, Spain, facilities, which are among the highest-cost producers in the Alcoa system.
At Portovesme, Alcoa will begin the consultation process to permanently close the facility. The La Coruña and Avilés curtailments are planned to be partial and temporary. The curtailments represent 240,000 metric tons, or about 5 percent, of Alcoa’s global smelting capacity.
“In today’s rapidly changing global economy, it is imperative to respond quickly to maintain competitiveness,” said Chris Ayers, Alcoa executive vice president and president of Alcoa Global Primary Products. “This decision was made after thorough analysis of all the possible alternatives. We are committed to working to find solutions that will minimize the impact on these communities and our workers there.”
The curtailments are expected to be complete by the first half of 2012. Alcoa’s alumina production will be reduced across the global refining system to reflect the final curtailments in smelting as well as prevailing market conditions. The curtailments will contribute to the company’s long-term goal of lowering Alcoa’s position on the world aluminum production cost curve by 10 percentage points, company officials said.