CHICAGO --- Alcoa Inc. plans to stop smelting aluminum at its first plant in Brazil and will further cut production at another smelter.
The Pittsburgh-based aluminum producer said March 27 that the cutbacks will cost the company between $40 million and $50 million after taxes, or 4 to 5 cents per share, in the first quarter.
Across the globe, we are taking measures to curtail high-cost smelting capacity that is not competitive and reshape our cost profile, Robert Wilt, president of Alcoas global primary products division, said in a statement.
Alcoa, which cut 34,000 tonnes of annual capacity at its Pocos de Caldas smelter in Brazil last year, now plans to idle the last three potlines, which have an annual capacity of 62,000 tonnes.
Alcoa also intends to curtail production at the plants alumina refinery, but it wont be idled, a company spokeswoman told AMM. The Pocos de Caldas bauxite mine, aluminum powder plant and casthouse will continue normal operations, the company said.
The Pocos de Caldas plant, established in 1965, was Alcoas first operation in Brazil, according to the companys website.
Alcoa also plans to reduce annual production at its Consorcio de Aluminio do Maranhao (Alumar) smelter in Sao Luis, Brazil, by 85,000 tonnes after slashing 97,000 tonnes of capacity in 2013. Before the cuts, Alcoas share of production at the facility was 268,000 tonnes per year, which means the company will have 86,000 tonnes per year once the cuts are implemented, the spokeswoman said.
Alumar, formed in 1984, is a consortium of Alcoa, Montreal-based Rio Tinto Alcan Inc. and Melbourne, Australia-based BHP Billiton Ltd., according to Alcoas website. The owners each have their own share of capacity, the spokeswoman said.
Primary aluminum producers have been cutting capacity in the wake of steep declines in aluminum prices over the past year. Alcoa said last May it had placed 460,000 tonnes of its smelting capacity under review for possible shutdown (amm.com, May 1). The company said it will have 21 percent of its smelting capacity--or about 800,000 tonnes per year--offline once the announced cuts and closures have been made.
The primary aluminum cash contract ended the London Metal Exchanges official session March 28 at $1,709.50 per tonne (77.5 cents per pound), down 9.1 percent from $1,881.50 per tonne (85.3 cents per pound) a year ago.