Canadian Manufacturing

Alcoa curtails smelting capacity at São Luís plant in Brazil

Once complete, Alcoa will have taken about 21 per cent of its smelting capacity offline in total curtailments

SÃO PAULO, Brazil—Lightweight metals maker Alcoa is curtailing the remaining 74,000 metric tonnes of smelting capacity at its São Luís (Alumar) facility in Brazil.

The move means Alcoa will record a US$10 million to $15 million restructuring charge in the first quarter.

The decision is part of the company’s upstream capacity evaluations for possible curtailment, closure or sale as Alcoa looks for strategic optimization. The curtailment is expected to be complete by April 15, 2015.

“We continue to take decisive steps to create a globally competitive commodity business and are executing against our upstream capacity review,” said Bob Wilt, president of Alcoa’s global primary products. “These are difficult but necessary actions in support of Alcoa’s strategy to lower the cost base of our upstream businesses.”

This curtailment adds to the 85,000 metric tonnes of capacity idled at São Luís in May 2014 and the 12,000 metric tonnes curtailed in October 2014.

Challenging global market conditions in primary aluminum production and increased costs have made the smelter uncompetitive. The refinery at São Luís is unaffected and will continue normal operations.

Alcoa’s is examining 500,000 metric tonnes of smelting capacity and 2.8 million metric tons of refining capacity for possible curtailment, closure or sale. Once the São Luís facility is curtailed, Alcoa will have approximately 740,000 metric tons, or 21 per cent, of its smelting capacity offline.

By curtailing high-cost smelting and refining capacity, Alcoa supports its goal of lowering its global aluminum and alumina costs by 2016.

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