Alcoa to cut global capacity by 12%

Alcoa Inc., the world’s leading producer of primary aluminum, fabricated aluminum and alumina, said it will reduce its global smelting capacity by 12% because of a steep drop in aluminum prices. The U.S.-based company said it will curtail operations at three European aluminum smelters by the first half of 2012, as part of a previously announced restructuring in its Global Primary Products Business. The restructuring will reduce the company’s global smelting capacity by 531,000 metric tons. Alcoa’s Portovesme, Italy, smelter, which has a capacity of 150,000 metric tons, will be permanently closed, while cutbacks at La Coruña and Avilés, Spain, with capacities of 87,000 and 93,000 metric tons, respectively, will be partial and temporary. The facilities are among the highest-cost producers in the Alcoa system. Alcoa previously announced the permanent closure of two facilities in the U.S., the smelter plant in Alcoa, Tennessee, and two potlines in Rockdale, Texas. An uncompetitive energy position, combined with rising raw material costs and falling aluminum prices, were cited as reasons for Alcoa’s actions. “In today’s rapidly changing global economy, it is imperative to respond quickly to maintain competitiveness,” said Chris Ayers, Alcoa executive vice president and president of Alcoa Global Primary Products. The company is taking a restructuring charge in the fourth quarter that will push it into its first loss in nine quarters. Prices of aluminum, which is used for automobiles, aircraft and household appliances, fell 18% last year and 6% in the fourth quarter. Traders cited the Euro zone crisis and a slowdown in China, a key consumer of aluminum, for the drop in prices. (January 6, 2012)