Alcoa Idling Production at Three US Smelters

Alcoa announced on November 2 that it is suspending aluminum production at its Intalco and Wenatchee primary aluminum smelters in Washington state and at its Massena West smelter in New York state. The decision will leave the company with no active smelter production in the United States.

The three smelters are all 100% owned by Alcoa. In total, the curtailments will reduce its worldwide primary aluminum smelting capacity by 503,000 mt/y. As of June 30, the company had worldwide attributable smelting capacity about 3.4 million mt/y.

The Intalco smelter has nameplate capacity of 279,000 mt/y, of which 49,000 mt/y had previously been idled. The Wenatchee smelter has nameplate capacity of 184,000 mt/y, of which 41,000 mt/y had previously been idled. The Massena West smelter has nameplate capacity of 130,000 mt/y.

Alcoa will complete the curtailments by the end of the first quarter of 2016. Once they are complete, Alcoa will have closed, divested or curtailed 45% of its total smelting operating capacity since 2007.

Alcoa also announced that it is partially curtailing alumina refining capacity at its Point Comfort, Texas, refinery by about 1.2 million mt/y. The Point Comfort plant has current rated capacity of 2.3 million mt/y, plus 295,000 mt/y of previously idled capacity.

Alcoa’s decision to curtail uncompetitive smelting and refining capacity will ensure its continued competitiveness amid prevailing market conditions, the Alcoa announcement said. Alcoa is currently projecting a 2016 global aluminum deficit of 360,000 mt, down from an estimated 551,000-mt surplus in 2015, driven by strong aluminum demand, smaller production increases, and smelter curtailments. The company is also projecting a 1-million-mt alumina deficit in 2016, down from a 2.2-million-mt surplus in 2015, due to record global alumina demand and refinery curtailments.

Alcoa’s announcement of its production curtailments in the United States followed by about a month earlier an announcement that it is pursuing plans to separate into two independent, publicly traded companies (E&MJ, November 2015, p. 4). An upstream company will include the five business units that currently make up Alcoa Global Primary Products: bauxite, alumina, aluminum, casting, and energy. A downstream innovation and technologydriven company will include Alcoa’s current Global Rolled Products, Engineered Products and Solutions, and Transportation and Construction Solutions business units.

Regarding the U.S. production cutbacks, Alcoa Chairman and CEO Klaus Kleinfeld said, “Alcoa has consistently taken decisive actions to create a commodity business that is positioned to succeed throughout the cycle. We have closed or curtailed unprofitable capacity,repowered key assets at lower energy prices, built-up a profitable value-added casthouse network, established the foundation for a strong commercial bauxite business, and made substantial productivity improvements.

“In the face of continued adverse market forces, we are once again not standing still. These difficult but necessary measures will further strengthen our upstream portfolio, reducing our cost position and driving greater resilience as we prepare to launch this business as a strong standalone company in the second half of 2016.”

As featured in Womp 2015 Vol 12 -