Lightweight metals leader Alcoa (NYSE: AA) today announced
that it will curtail the remaining 74,000 metric tons of smelting
capacity at its São Luís (Alumar) facility in Brazil. The decision is
aligned with the Company’s recent
announcement to evaluate upstream capacity for possible curtailment,
closure or sale as Alcoa further optimizes its commodity portfolio. 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 tons of capacity idled at São
May 2014 and the 12,000 metric tons 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.
“We understand how deeply this decision affects our employees, our
contractors and our communities,” said José A. Drummond, President of
Alcoa Latin America. “Our teams have worked extremely hard to make the
plant competitive, and we will actively consult with our employees,
unions and community stakeholders to minimize the impact of this action.
We will continue working to achieve the competitive conditions necessary
for aluminum production in the region.”
The curtailment is in line with Alcoa’s announcement on March 6, 2015 to
evaluate 500,000 metric tons 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 percent, of its smelting capacity offline.
As a result of today’s announcement, Alcoa will record a
restructuring-related charge in the first quarter expected to be between
$10 million and $15 million after-tax, or $0.01 per share.
By curtailing high-cost smelting and refining capacity, Alcoa
supports its goal of lowering its position on the global aluminum cost
curve to the 38th percentile and the global alumina cost
curve to the 21st percentile, by 2016.
A global leader in lightweight metals technology, 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 approximately 59,000 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,
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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 goal to create a globally
competitive commodity business, the expected timing for completing the
curtailment of the smelting capacity at its São Luís facility, and other
statements about Alcoa’s strategies, outlook, and business and financial
prospects. Forward-looking statements are subject to a number of 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, 2014, 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.