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Alcoa to shut two potlines, delay third

Keywords: Tags  Alcoa, Baie-Comeau, Quebec, Martin Brière, Alcoa Canada Primary Products, potline, closure, capacity reduction aluminum price


CHICAGO — Alcoa Inc. plans to permanently close two older potlines at its Baie-Comeau smelter in Quebec and postpone the construction of a new potline by three years as the company looks to cut costs.

The two Soderberg potlines, which have 105,000 tonnes of capacity, are scheduled to be closed by August, the Pittsburgh-based aluminum producer said May 16. Restructuring charges related to the closures are forecast to be between $135 million and $155 million after tax in 2013, 30 percent of which will be expected to be recorded in the second quarter, the company said.

The potline closures come after Alcoa said that it was looking to cut as much as 460,000 tonnes of smelter capacity globally over the next 15 months in the face of low aluminum prices ( amm.com, May 1).

The LME’s cash aluminum contract rose to $1,802.50 per tonne May 16, up 0.1 percent from $1,800.50 per tonne on May 15 but down 15.1 percent from this year’s high of $2,123 recorded on Feb. 15.

Pushing back construction of the new potline from 2016 to 2019 also comes because of “current market conditions,” Alcoa said, adding that the new potline remains subject to board approval. “These efforts will help move our Baie-Comeau plant down the global aluminum cost curve,” Martin Brière, president of Alcoa Canada Primary Products, said in a statement. He noted that provincial officials had been “very open” to the changes “when it became important for Alcoa to adapt to market realities.”

In addition, Alcoa said it would invest $100 million in the Baie-Comeau smelter over the next three years, with $30 million of that money earmarked for upgrading the plant’s casthouse operations as the company looks to support growing demand from the automotive sector. That money comes in addition to $75 million already slated to be spent to rebuild the plant’s port facilities, Alcoa said.

In November 2011, Alcoa announced plans to add a new potline at Baie-Comeau that the company said at the time would be in service by the end of 2015. The company also said at the time that the older Soderberg potlines would be replaced with a new potline with capacity of 160,000 tonnes ( amm.com, Nov. 7, 2011).

A $1.2-billion project to modernize the Baie-Comeau smelter, built in 1957, reached the feasibility phase in November 2011, according to Alcoa’s web site.

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