Winter Park, Florida 02/11/2015 - Alcoa announced on Monday that it will curtail 503,000 tonnes of aluminium smelting and 1.2 million tonnes of alumina refining capacity in the United States.
Alcoa will idle the Intalco and Wenatchee primary aluminium smelters in Washington and the Massena West smelter in New York. The curtailments will begin this quarter and will be completed by the end of the first quarter of 2016.
It will also cancel the modernization of the New York Massena East smelter and will permanently close the facility; potlines at Massena East have been closed since March 2014.
The casthouses at Intalco and Massena West, which produce value-add shaped products, will continue to operate. The Alcoa forgings and extrusions facility in Massena is unaffected, it added.
In its alumina business, Alcoa will partially curtail refining capacity at its Pt. Comfort, Texas, facility by about 1.2 million tonnes.
"The reductions will further improve the cost position of the upstream business and ensure competitiveness in a lower pricing environment, including a 30 percent drop in the Midwest transaction aluminium price year-to-date," Alcoa said in a statement.
Three-month aluminium on the London Metal Exchange last traded at $1,491 per tonne after hitting a six-year low of $1,460 last week. The US Midwest aluminium premium is currently a 7.5 cents per pound above the LME price, which is about a third of what it was this time last year.
Once these actions are implemented, Alcoa will have curtailed or closed 673,000 tonnes of uncompetitive smelting capacity and 2.5 million tonnes of alumina refining capacity since its announced review of 500,000 tonnes of smelting capacity and 2.8 million tonnes of refining capacity in March 2015.
Total restructuring-related charges in the fourth quarter associated with the announcement are expected to be between $160 million and $180 million after-tax of which approximately 30 percent would be non-cash, the company said.
Last month, Alcoa announced that it will split into two separate companies, one upstream and another downstream. Both will be publicly traded Fortune 500 companies. The move is set to be completed by the end of the second half of 2016.