) has wrapped up a $300 million expansion at its Davenport, Iowa
plant that supplies aluminum sheet products to the automotive
industry. The company has secured long-term supply agreements for
ALCOA INC (AA): Free Stock Analysis Report
ATLATSA RESRCS (ATL): Free Stock Analysis
GENERAL MOLY IN (GMO): Free Stock Analysis
TAHOE RESOURCES (TAHO): Free Stock Analysis
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The Iowa expansion created 150 jobs during its construction phase
and will also create additional 150 full-time jobs. The expansion
is the first of three capacity expansion projects that are
underway to meet rising demand for aluminum intensive vehicles.
Alcoa is also adding automotive capacity in Tennessee, which is
slated to complete by the middle of next year. Moreover, the
company is building a rolling mill (expected to complete by
end-2014) at its greenfield joint venture project in Saudi Arabia
with capacity to produce aluminum automotive sheets. Alcoa is
spending roughly $670 million on these expansions.
As per automotive original equipment manufacturers (OEMs), the
use of aluminum in cars is expected to nearly double by 2025 as
automakers seek more fuel efficiency by reducing vehicle mass.
Moreover, the amount of aluminum body sheet content in vehicles
is expected to quadruple by 2015 and rise ten-fold by 2025 from
2012 levels in North America.
Aluminum currently represents the second largest-volume component
material in automotive vehicles. Many OEMs are expanding aluminum
use from heat exchangers, wheels, drive shafts, engine blocks,
hoods and deck lids to develop aluminum intensive vehicles by
converting the body in white, or body structure, to aluminum.
Automotive has been one of Alcoa's strongest markets. The
automotive industry is showing strength with U.S. auto sales
increasing 8% year over year to 15.6 million units last year.
Alcoa sees significant growth of aluminum use in the auto sector
this year as automakers increasingly look for the metal as a
cost-effective mean to boost performance, safety, durability and
fuel efficiency of their vehicles.
Alcoa is a Zacks Rank #3 (Hold) stock.
Other companies in the mining industry worth considering include
General Moly, Inc.
Atlatsa Resources Corp.
Tahoe Resources Inc.
). While General Moly holds a Zacks Rank #1 (Strong Buy), both
Atlatsa Resources and Tahoe Resources retain a Zacks Rank #2