) announced that it will permanently shut down the remaining two
potlines at its Massena East smelter in New York in the first
quarter of 2014. The step has been taken by Alcoa as the potlines
were no longer competitive.
The move will reduce Alcoa's smelting capacity by 84,000 tons.
The company's Massena West facility will not be affected and
Alcoa will work with the New York Power Authority and others to
ensure its continuing success at Massena West. Alcoa's strategy
of curtailments is consistent with its previously announced 2016
goal of lowering its position on the world aluminum production
cost curve to the 38th percentile and the alumina cost curve to
the 21st percentile.
Alcoa has already closed one of the three potlines at the Massena
facility in Aug 2013. Including the closure of the remaining two
potlines at Massena East, the company has announced closures or
curtailments representing 361,000 metric tons of the 460,000
metric tons that were placed under review in May 2013.
After the completion of the closures of the two Massena East
potlines, Alcoa will have a total smelting operating capacity of
3,950,000 metric tons, with roughly 655,000 metric tons of
capacity idle. The company expects to incur restructuring-related
charges of between $60 and $70 million (after-tax) or 6 cents per
share, of which around 40% is non cash, in the first quarter of
Recently, Alcoa released its fourth quarter 2013 results. The
company posted a loss of $2.3 billion or $2.19 per share in the
fourth quarter of 2013 compared with a profit of $242 million or
21 cents per share in the year-ago quarter. The loss was mainly
due to the sizable goodwill impairment charges of $1.7 billion
related to acquisitions in the Primary Metals business.
Excluding one-time special items, earnings came in at $40
million or 4 cents per share in the reported quarter, below the
year-ago earnings of $64 million or 6 cents. It also missed the
Zacks Consensus Estimate of 6 cents.
Revenues dropped roughly 5.3% to $5,585 million in the fourth
quarter from $5,898 million in the year-ago quarter but exceeded
the Zacks Consensus Estimate of $5,391 million. The decline was
primarily due to weak aluminum prices which declined 7% year over
ALCOA INC (AA): Free Stock Analysis Report
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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.
). All of them retain a Zacks Rank #2 (Buy).