Alcoa Corporation has announced it will fully curtail operations at its Kwinana Alumina Refinery in Western Australia in 2024, with the process commencing in the second quarter of the year.
With an annual nameplate production capacity of 2.2 metric tonnes, the refinery has been operating at around 80% of its capacity since January 2023.
Alcoa Executive Vice President and COO Matt Reed said the decision to curtail operations at the facility is due to several factors, such as its age, scale, operating costs, and current bauxite grades, in addition to current market conditions.
With the decision expected to impact around 800 employees and 250 contractors, Reed acknowledged that the decision will impact workers, business partners, and the community.
“We deeply appreciate the commitment and support of our many loyal employees, contractors, and suppliers at our Kwinana refinery, which has made a major contribution to Western Australia’s economic development over the last 60 years of continual operation,” he stated.
After alumina production ceases, the workforce will be phased down from 800 at the start of 2024 to 250 in the third quarter of this year. Certain processes will continue until the third quarter of 2025 when numbers will be further reduced to 50.
“We will work closely with our employees to provide support with transitioning to other opportunities. This includes potential redeployment within our business or assistance to facilitate employment at other workplaces,” Reed said.
The Western Australian Government has expressed disappointment in the company’s decision.
“This is a very disappointing outcome, and Alcoa needs to do everything it can to support its workforce through this transition,” Premier Roger Cook said.
The State Government has committed to supporting the impacted workers with a range of measures in place to provide jobs, upskill, and reskill workers to enable them to take advantage of new opportunities.
“My Government will step up to provide supports for local workers to retrain, reskill and look for new career opportunities in the local area,” Premier Cook stated.
The Rockingham Jobs and Skills Centre will work with Alcoa to match affected employees with employers in Kwinana and nearby areas.
Furthermore, South Metropolitan TAFE is on standby to provide free career and training advice to displaced workers while the State Government is exploring additional support options, including establishing a temporary Jobs and Skills Centre at Kwinana in consultation with Alcoa.
Training and Workforce Development Minister Simone McGurk urges workers to utilise the available resources for upskilling, reskilling, or forging new career paths.
Alcoa’s refinery and residue storage facilities will remain operational, while port facilities near the refinery will continue to import raw materials and export alumina produced at the Pinjarra Alumina Refinery, and production at the Pinjarra and Wagerup refineries is not expected to be affected.
“We remain committed to WA in the long-term and will continue to assess options for the refinery, monitoring the factors that have led to the curtailment decision,” Reed added.
The Kwinana refinery’s net loss in 2023 was $130 million, with an expected $70 million annual improvement starting in Q3 2024 due to curtailment. However, the refinery will still incur $40 million in non-cash depreciation, depletion, and amortisation expenses.
Alcoa is set to incur restructuring charges of $180 million to $200 million in Q1 2024 due to the refinery’s closure. The company’s share of these charges is expected to be between $76 million and $84 million, with costs including water management, employee-related expenses, asset retirement obligations, and other expenses. Alcoa’s share of related cash outlays is expected to be spent between 2024 and 2025.
