US-based Alcoa will be meeting with representatives of the national and regional authorities in Spain this week to discuss financial losses at the San Ciprian complex, which consists of an alumina refinery and an aluminium smelter.
Alcoa curtailed operations at the smelter in January last year, and operated the refinery at 50% capacity since the third quarter of 2022 to mitigate losses.
“The economics for both the smelter and the refinery have continued to worsen,” Alcoa said in a statement on Monday.
Since the smelter’s curtailment, the long-term cost for energy remains uncompetitive while the permitting and development of alternative energy supplies, supported by Alcoa’s signed power purchase agreements, have been delayed.
Further, the company has experienced market challenges that include the impact of the slowdown in Europe and lower sales prices.
Despite this, Alcoa said that it had continued to comply with the terms of the February 2023 viability agreement, under which it had agreed to a phased restart of the aluminium smelter in January 2024.
“We’ve been working to abide by all of the commitments contained in the Viability Agreement, including making capital investments, but the current situation remains severely challenged,” said Alcoa president and CEO William Oplinger.
“We are resolved to continue conversations with the government and workers’ representatives in a collaborative manner as we look to a long-term solution.”
When the original and amended viability agreements were signed, Alcoa had sufficient funding to honour all its commitments. However, based on current and foreseeable economic conditions, Alcoa would need to find solutions for the long term to deal with the unsustainable business conditions.