Alcoa to cut global smelting capacity by 12%
9 Jan 2012
New York – Alcoa is to close or curtail around 531 kilotonnes per annum (ktpa), or 12% of its global smelting capacity, in a bid to improve its competitiveness following a 27% fall in aluminum prices in 2011.
The company will permanently close its smelter in Alcoa, Tennessee, along with two of six idled potlines at its Rockdale, Texas smelter. Together, these closures will reduce Alcoa’s global smelting capacity of 4,5000ktpa by 291ktpa, or about 7%. The measures are expected to be complete by the first half of 2012.
Other cutback measures, to be announced in the near future, will reduce Alcoa’s global smelting capacity by an additional 240ktpa, or about 5%. The company said that it will also accelerate actions to reduce the escalating cost of raw materials.
In Europe, Alcoa is to curtail operations at three aluminum smelters as part of the restructuring – at Portovesme, Italy, and La Coruña and Avilés, Spain, in the first half of 2012. The facilities are among the highest-cost producers in the Alcoa system, the group stated.
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. An uncompetitive energy position, combined with rising raw material costs and falling aluminum prices, led to the planned curtailment of the facilities, the company said.
The curtailments represent 240ktpa, or about 5%, of Alcoa’s global smelting capacity. Total capacity at Portovesme is 150ktpa. Capacity at La Coruña and Avilés is 87ktpa and 93ktpa, respectively.
“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,” said Klaus Kleinfeld, Alcoa chairman and CEO.
Kleinfeld added that Alcoa would explore ways to redevelop closed facilities and will consult with employees and work unions/councils impacted by the closures.
Alcoa said its alumina production will also be reduced across the global refining system to reflect the final curtailments in smelting as well as prevailing market conditions. Alcoa has stated a long-term goal of lowering it’s position on the ’world aluminum production cost curve’ by 10%.
Difficulties in the global aluminium market were also highlighted last November when Rio Tinto Alcan announced plans to close its Lynemouth aluminium smelter in the UK.
The Lynemouth smelter in Northumberland opened in 1972. It employs 515 people, with another 111 employed at an associated power station.
Rio Tinto Alcan said it had explored every option for continuing to operate the smelter and power station. However, it decided that the business was unsustainable because of rising energy costs due to emerging legislation.
