Alcoa to shutter two Brazil smelters

28th March 2014 By: Henry Lazenby - Creamer Media Deputy Editor: North America

Alcoa to shutter two Brazil smelters

Photo by: Reuters

TORONTO (miningweekly.com) – US-based alumina and aluminium producer and refiner Alcoa on Friday said that the continued challenging global market conditions in primary aluminium, and increased costs, had made two smelters in Brazil uncompetitive, and would, therefore, be closed at the end of May.

NYSE-listed Alcoa announced that it would curtail 147 000 metric tons of smelting capacity at its São Luís (Alumar) and Poços de Caldas smelters.

Last year, the company curtailed 97 000 metric tons at São Luís and 34 000 metric tons at Poços. The new curtailments would include the remaining 62 000 metric tons of capacity from the Poços smelter, resulting in a full curtailment of its three potlines. Another 85 000 metric tons would be curtailed at São Luís.

“Across the globe, we are taking measures to curtail high-cost smelting capacity that is not competitive and reshape our cost profile. These are difficult but necessary actions in support of Alcoa’s strategy to lower the cost base of our upstream businesses,” Alcoa global primary products president Bob Wilt said.

At Poços, the refinery would also reduce production; however, the mine, aluminium powder plant and casthouse would continue normal operations, as would the refinery at São Luís.

Other Alcoa operations in Brazil were not affected.

In May last year, Alcoa placed 460 000 t of smelting capacity under review. Once all announced curtailments and closures had been completed, the company would have about 800 000 t, or 21%, of smelting capacity offline.

Total after-tax restructuring-related charges associated with the Brazil curtailments in the first quarter were expected to be between $40-million and $50-million, or $0.04 to $0.05 a share, of which about 30% would be noncash.