) announced that it will permanently shut down its Portovesme
primary aluminum smelter in Italy that has been curtailed for
nearly two years now.
The closure of the Portovesme smelter will cut the company's
smelting capacity by 150,000 metric tons to 3.6 million metric tons
a year. Alcoa curtailed the plant in 2012 as it was one of its
highest-cost smelters and displayed little scope of becoming
Due to the closure, Alcoa expects to book restructuring-related
charges between $170 million and $180 million after-tax, or between
14 cents 15 cents per share, of which roughly 60% is non-cash, in
Alcoa is making capital investments and remains on track to move
down the cost curve and curtail capacities in its upstream
business. The curtailments will improve the competitiveness of the
company's Primary Products business.
Alcoa's second-quarter 2014 adjusted earnings skyrocketed 157% to
18 cents per share from the 7 cents earned in the year-ago quarter.
Strong results from its downstream and primary metals businesses
aided by higher aluminum pricing, led to the improved results.
Alcoa's adjusted second-quarter earnings outpaced the Zacks
Consensus Estimate by a healthy 38.46%. Moreover, the company
continues to expect aluminum demand to rise 7% this year.
Alcoa has implemented a number of restructuring measures and is
aggressively pursuing cost-cutting actions. The company, during the
second quarter, completed the curtailment of 147,000 metric tons of
smelting capacity in Brazil at Sao Luis (Alumar) and Pocos de
The closure of the Italian smelter is in sync with Alcoa's strategy
of lowering its position on the world aluminum production cost
curve to the 38th percentile by FY16.
Alcoa, a prominent mining company along with Aluminum Corporation
of China Limited (
), currently holds a Zacks Rank #2 (Buy).
Other stocks in the mining sector worth considering include
Kazakhmys PLC (
), and Orbite Aluminae Inc. (
), both carrying a Zacks Rank #2.
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