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Alcoa to close or curtail 164,000 tonnes of aluminum smelting capacity

Alcoa will close or curtail 164,000 tonnes (mt) of smelting capacity in the United States and Brazil as part of its smelting capacity review announced in May. One potline representing 40,000 mt at the Massena East plant in New York will be permanently closed. In addition, the company has started to temporarily curtail 124,000 mt at its smelters in Brazil. The closures and curtailments will be complete by the end of September.

We committed in May to review our global smelting capacity for possible curtailment to maintain the Company’s competitiveness. Aluminum prices, including premiums, have fallen to four-year lows and we continue to operate in an uncertain, volatile market.

—Bob Wilt, president of Alcoa’s Global Primary Products

Wilt added that the Company will work with stakeholders in affected communities to minimize the impact of the closures and curtailments.

To date, Alcoa has announced closures or curtailments representing 269,000 tonnes of the 460,000 mt placed under review in May. This includes the permanent closure of 105,000 mt of capacity announced earlier at Alcoa’s Baie-Comeau smelter in Canada. In addition, the Company permanently closed its Fusina, Italy smelter representing 44,000 mt that was not part of the May review.

Once the Massena and Brazil closures and curtailments are complete, Alcoa will have 16%, or 646,800 metric tons of smelting capacity idle.

Alcoa’s review of its primary metals operations is consistent with the Company’s 2015 goal of lowering its position on the world aluminum production cost curve by 10 percentage points and the alumina cost curve by 7 percentage points.

Total restructuring-related charges for third quarter 2013 associated with the above actions are expected to be between $5 and $10 million after-tax, or $0.01 per share, of which approximately 50% is non-cash.

Automotive is a growth market for Alcoa. Source: Alcoa 2013 annual meeting. Click to enlarge.



I wonder how the recent price trend correclate to recent recycling trends and whether those have anything to do with unemployment and the last economic correction.


There's two sides to this story:

First, Alcoa is jettisoning high cost plants such as the facility in Italy.
Second, there is a lack of general aggregate demand in the economy. The fact that they're reducing capacity at an ultra low-cost facility in Canada is evidence of this.

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