Company will have 21% of smelting capacity offline when actions complete
Alcoa (NYSE: AA) today announced it will curtail 147,000 metric tons of
smelting capacity at its São Luís (Alumar) and Poços de Caldas smelters
in Brazil due to challenging global market conditions in primary
aluminum and increased costs that have made the smelters uncompetitive.
The curtailments are expected to be complete by the end of May 2014.
In 2013, the Company curtailed 34,000 metric tons at Poços and 97,000
metric tons at São Luís. The new curtailments will 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 will
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,” said Bob
Wilt, President of Alcoa Global Primary Products. “These are difficult
but necessary actions in support of Alcoa’s strategy to lower the cost
base of our upstream businesses.”
As a result of the smelter curtailment, the Poços refinery will also
reduce production accordingly. The mine, aluminum powder plant and
casthouse at Poços will continue normal operations, as will the refinery
at São Luís. Other Alcoa operations in Brazil are not affected.
“We know how deeply this decision affects our employees, our contractors
and our communities,” said Aquilino Paolucci, President of Alcoa Latin
America and the Caribbean. “While our teams have worked incredibly hard
to make these facilities more competitive, we must take steps regarding
our primary metal production in Brazil given the market conditions we
are facing. We appreciate the support of governments at all levels, and
will actively work in partnership with our employees, unions, and
community stakeholders to manage through this transition and minimize
the impact.”
In May 2013, Alcoa placed 460,000 metric tons of smelting capacity under
review. Once all announced curtailments and closures are complete, Alcoa
will have approximately 800,000 metric tons, or 21 percent, of smelting
capacity offline.
Total restructuring-related charges associated with the Brazil
curtailments in the first quarter are expected to be between $40 million
and $50 million after-tax, or $0.04 to $0.05 per share, of which
approximately 30 percent would be non-cash.
Alcoa’s review of its primary metals operations is consistent with the
Company’s goal of lowering its position on the world aluminum production
cost curve to the 38th percentile and the alumina cost curve
to the 21st percentile, by 2016.
About Alcoa in Brazil
Alcoa operates in Brazil throughout the aluminum production chain, from
bauxite mining to the production of transformed and value-add products.
Alcoa has 5,700 employees and six production units and offices in the
states of Maranhão, Minas Gerais, Pará, Pernambuco, Santa Catarina, São
Paulo and Federal District. Alcoa owns 100% of the Poços smelter, and
the São Luís smelter is owned 60% by Alcoa Alumínio and 40% by BHP
Billiton. The Company also has shareholdings in Mineração Rio do Norte
(MRN) and in four hydroelectric power plants: Machadinho, Barra Grande,
Serra do Facão and Estreito. In 2013 it was considered the most
sustainable company in its industry and in the category of Relationship
with Suppliers of the Guia EXAME de Sustentabilidade [EXAME Magazine’s
Sustainability Guide]. In the same year, it was recognized for the
twelfth time as one of the Best Companies to Work and for the second
consecutive year the Best Company for Women to Work in Brazil, by the
Great Place to Work Institute.
About Alcoa
A global leader in lightweight metals engineering and manufacturing,
Alcoa innovates multi-material solutions that advance our world. Our
technologies enhance transportation, from automotive and commercial
transport to air and space travel, and improve industrial and consumer
electronics products. We enable smart buildings, sustainable food and
beverage packaging, high-performance defense vehicles across air, land
and sea, deeper oil and gas drilling and more efficient power
generation. We pioneered the aluminum industry over 125 years ago, and
today, our 60,000 people in 30 countries deliver value-add products made
of titanium, nickel and aluminum, and produce best-in-class bauxite,
alumina and primary aluminum products. For more information, visit www.alcoa.com,
follow @Alcoa on Twitter at www.twitter.com/Alcoa
and follow us on Facebook at www.facebook.com/Alcoa.
Forward-Looking Statements
This release contains statements that relate to future events and
expectations and as such constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include those containing such words as
“estimates,” “expects,” “goal,” “plans,” “will,” or other words of
similar meaning. All statements that reflect Alcoa’s expectations,
assumptions or projections about the future other than statements of
historical fact are forward-looking statements, including, without
limitation, statements about Alcoa’s strategies, outlook, and business
and financial prospects. Forward-looking statements are subject to a
number of known and unknown risks, uncertainties, and other factors and
are not guarantees of future performance. Important factors that could
cause actual results to differ materially from those expressed or
implied in the forward-looking statements include: (a) material adverse
changes in aluminum industry conditions, including global supply and
demand conditions and fluctuations in London Metal Exchange-based prices
and premiums, as applicable, for primary aluminum, alumina, and other
products, and fluctuations in indexed-based and spot prices for alumina;
(b) deterioration in global economic and financial market conditions
generally, or unfavorable changes in the markets served by Alcoa; (c)
Alcoa’s inability to successfully realize goals established in each of
its four business segments, at the levels or by the dates targeted for
such goals (including moving its alumina refining and aluminum smelting
businesses down on the industry cost curves and increasing revenues and
improving margins in its Global Rolled Products and Engineered Products
and Solutions segments); (d) changes in preliminary accounting estimates
due to the significant judgments and assumptions required; and (e) the
other risk factors discussed in Alcoa’s Form 10-K for the year ended
December 31, 2013, and other reports filed with the Securities and
Exchange Commission. Alcoa disclaims any obligation to update publicly
any forward-looking statements, whether in response to new information,
future events or otherwise, except as required by applicable law.
Alcoa
Investor Contact
Kelly Pasterick, + 1 212-836-2674
Kelly.Pasterick@alcoa.com
OR
Media Contacts
New York: Monica Orbe, + 1 212-836-2632
Monica.Orbe@alcoa.com
or
Brazil: Eliane Uchoa, +55 11 3296-3058
Eliane.Uchoa@alcoa.com.br