Politics, not economics, key to aluminum smelter closures: execs

Nov 13, 2012 | 05:51 PM | Andrea Hotter

Tags  aluminum, Alcoa, United Co. Rusal, Rio Tinto Alcan, Norsk Hydro, aluminum smelters, smelter closures, Klaus Kleinfeld Jacynthe Cote

NEW YORK — Politics, not economics, often play the key role in determining whether aluminum producers curtail capacity, senior executives at the world’s leading companies told AMM sister publication Metal Bulletin.

This has made proposed cutbacks a sometimes messy battleground with unions and politicians.

The most recent of these fights played out in Italy, where Pittsburgh-based aluminum producer Alcoa Inc. just completed the curtailment of its 150,000-tonnes-per-year Portovesme smelter in Sardinia.

The high-cost smelter had been losing money for some time, plagued by low productivity and depressed metals prices.

The government is seeking a buyer for the plant, a crucial local employer, and said it will significantly subsidize its energy costs to keep it running.

"We have had a good relationship with the Italian government in the past, and we still have a good relationship currently. ‘Good’ doesn’t mean we didn’t have different opinions, but it meant there was a very intense dialogue and fair way of dealing with each other," Alcoa chief executive officer Klaus Kleinfeld said.

Positive community relations are therefore key, particularly when dealing with politically charged situations, he said. ....