Alcoa Reaches Agreement on Future of San Ciprián Smelter

Alcoa Corp. and the workers’ representatives at the San Ciprián smelter in Spain have reached an agreement aimed at resolving ongoing challenges that stem from exorbitant energy prices. The agreement, which was signed on December 29, called for a two-year curtailment of the smelter’s 228,000 metric tons (mt) of annual capacity, and committed to restarting the smelter in January 2024.

“With this agreement, we now have a path to resolve the significant challenges that the facility has faced and can begin to build a stronger smelter in two years,” Alcoa President and CEO Roy Harvey said. “This has been a challenging road for everyone involved, and we look forward to the future, working constructively with our employees and stakeholders to implement the agreement we reached.” Curtailment activities began on January 1, with completion expected before the end of January. During the curtailment period, Alcoa will seek to secure as soon as possible long-term power purchase agreements, beginning from 2024. Also, the company committed $68 million for capital investments and $35 million for restart costs. As part of the agreement, workers will immediately cease a strike action that has affected both the aluminum smelter and the alumina refinery.

In addition, the company committed to provide employees full wages and benefits during the two-year curtailment period, to extend the contracts of contractor companies through 2024, and to provide a new collective bargaining agreement that includes pay increases extending to the end of 2025.

For 2021, the San Ciprián smelter recorded a net loss before taxes of approximately $65 million, with most of the impact in the fourth quarter based on increased power prices. The December 2021 average spot market power price in Spain was $276 per megawatt hour. During the curtailment, the casthouse will continue to operate, and the San Ciprián alumina refinery will continue to operate normally.

As featured in Womp 2022 Vol 02 -