) and the Government of Quebec have signed an agreement to
improve the competitiveness of the former's three smelters in
Quebec. Per the deal, Hydro-Quebec will renew Alcoa's power
supply contracts for the Becancour and Deschambault facilities
till 2030 and for the Baie-Comeau plant through 2036. This will
save about 3000 jobs in Quebec.
The deal will allow Alcoa to invest about $250 million at the
smelters over the next five years. Alcoa will also increase their
aluminum production but reduce production of commodity-grade
aluminum at the Baie-Comeau casthouse in order to meet the
growing demand of aluminum from automakers for more
As per the automakers, aluminum body sheet content in North
American vehicles is expected to increase four-fold by 2015 and
ten-fold by 2025, from 2012 levels.
These actions represent Alcoa's strategy of making capital
investments, moving down the cost curve and curtailing capacities
in its upstream business. The curtailments will improve the
competitiveness of the company's Primary Products business.
Smelting aluminum requires large amounts of electricity, so power
costs play a big role in determining where aluminum producers
choose to build their smelters. Hence, Alcoa will support the
government's electric transportation strategy by considering the
Baie-Comeau facility as a possible source of aluminum for
emerging technology applications, including aluminum-air
Alcoa also stated that it no longer plans to build a new potline
to replace the two it closed at its Baie-Comeau facility last
Alcoa, a prominent player in the mining industry along with
Aluminum Corporation of China Ltd.
Atlatsa Resources Corp.
BHP Billiton Ltd.
), is a world leader in production and management of primary
aluminum, fabricated aluminum, and alumina.
Alcoa currently retains a short-term Zacks Rank #3 (Hold).
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