) announced that it will cut 147,000 metric tons of smelting
capacity at its Sao Luis (Alumar) and Pocos de Caldas smelters in
Brazil. The company is cutting capacity to address the
challenging market conditions as well as increasing costs that
made the smelters uncompetitive.
At the Poços smelter, Alcoa will curtail 62,000 metric tons of
capacity and 85,000 metric tons will be curtailed at Sao Luis.
The curtailments are expected to be complete by the end of May
As a result of the cutbacks, the three potlines of the Pocos
smelter will be fully curtailed and the Pocos refinery will also
reduce production. However, the mine, aluminum powder plant and
casthouse at Poços will carry on with their normal operations.
The refinery at Sao Luis will also continue with the normal
The company expects to incur restructuring charges in the range
of $40 million and $50 million after-tax, or 4 cents to 5 cents
per share in the first quarter related to the curtailments in
Brazil. 30% of the expense incurred will be non cash.
In May 2013, Alcoa announced that it will review 460,000 metric
tons of smelting capacity over the next 15 months for potential
curtailment. Once the company completes all the curtailments and
closures, it will have about 80,000 metric tons or 21% of
smelting capacity offline.
Earlier in Feb 2014, Alcoa announced that it will permanently
shut down its Point Henry aluminum smelter and two rolling mills
in Australia by the end of 2014. Alcoa had put the Point Henry
smelter under strategic review since 2012 due to the challenging
market conditions and found that the smelter had no prospect of
becoming financially viable.
Alcoa remains on track to move down the cost curve and curtailed
capacities in its upstream business. The curtailments will
improve the competitiveness of the company's Primary Products
Alcoa, a prominent player in the mining industry along with
Aluminum Corporation of China Ltd.
Atlatsa Resources Corp.
) and B
HP Billiton Ltd.
), is a world leader in production and management of primary
aluminum, fabricated aluminum, and alumina. The company currently
retains a short-term Zacks Rank #2 (Buy).
ALCOA INC (AA): Free Stock Analysis Report
ATLATSA RESRCS (ATL): Free Stock Analysis
BHP BILLITN LTD (BHP): Free Stock Analysis
To read this article on Zacks.com click here.