Alcoa continues to trim smelting and refining capacity to further increase upstream competitiveness

Image credit: Alcoa

Leading lightweight metals manufacturer Alcoa has announced that it will further reduce its aluminium smelting and its alumina refining capacity to ensure continued competitiveness amid “prevailing market conditions”.

Image credit: Alcoa

According to the press release, the curtailments will begin in the fourth quarter of 2015 and will see Alcoa reduce its aluminium smelting capacity by 503,000 metric tons and its alumina refining capacity by 1.2 million metric tons.

Alcoa’s Chairman and CEO Klaus Kleinfeld said the reductions would improve the company’s cost position of the Upstream business and “ensure competitiveness” in a lower pricing environment.

“Alcoa has consistently taken decisive actions to create a commodity business that is positioned to succeed throughout the cycle. We have closed or curtailed unprofitable capacity, repowered key assets at lower energy prices, built-up a profitable value-add casthouse network, established the foundation for a strong commercial bauxite business, and made substantial productivity improvements,” Mr Kleinfeld said.

“In the face of continued adverse market forces, we are once again not standing still. These difficult, but necessary measures will further strengthen our Upstream portfolio, reducing our cost position and driving greater resilience as we prepare to launch this business as a strong standalone company in the second half of 2016.”

As part of these curtailments, Alcoa will idle the Intalco and Wenatchee primary aluminium smelters in Washington State, and the Massena West smelter in New York, and partially restrict refining capacity at its Pt. Comfort facility in Texas.

“Across the globe, we have been taking measures to curtail smelting and refining capacity that is not competitive to improve our cost profile. Alcoa has a long, proud history at the affected locations and our dedicated employees have worked hard to keep our facilities competitive in the face of challenging market conditions,” said Roy Harvey, Executive Vice President and President, Global Primary Products.

“Unfortunately, today’s pricing environment necessitates very difficult decisions. We recognize how deeply these decisions affect our Alcoa family and communities and are committed to working closely with our employees and unions and local stakeholders to support them through this transition.”

The company said that once these actions are implemented, it will have curtailed or closed 673,000 metric tons of uncompetitive smelting capacity and 2.5 million metric tons of uncompetitive refining capacity since its announced review of the business in March 2015.