Alcoa Inc, the largest US aluminum producer, will close its uneconomic Point Henry smelter in Australia, and two rolling mills hurt by excess capacity for materials used to make cans.
Shutting the 50-year-old Point Henry smelter, in Geelong, 74km southwest of Melbourne, will cut Alcoa’s global smelting capacity by 190,000 tonnes to 3.7 million tonnes, the New York-based company said on Monday in a statement. Combined with the closure of rolling mills in Victoria and New South Wales, it will result in the loss of almost 1,000 jobs.
The smelter is “a small operation which doesn’t use modern technology and can’t be upgraded,” Sydney-based Credit Suisse Group AG analyst Matthew Hope said by telephone. “You’d have to rebuild the entire smelter and they don’t want to do that, particularly in Australia.”
Alcoa is building the world’s lowest-cost smelter in Saudi Arabia in a joint venture with Saudi Arabian Mining Co, or Maaden. Since May, its has curtailed or permanently closed 551,000 tonnes of capacity at higher-cost plants in the US and Europe. Alcoa will seek a buyer for the Anglesea coal mine and power station that supplies about 40 percent of the Port Henry smelter’s power, the company said.
The Australian assets closed “are no longer competitive and are not financially sustainable today or into the future,” Alcoa chief executive officer Klaus Kleinfeld said in the statement.
The future of the smelter, 60 percent owned by Alcoa, has been under review since February 2012.
The closures follow other setbacks for Australia’s manufacturing industry. Toyota Motor Corp this month signaled the end of the nation’s carmaking industry, saying it will shut its production lines in three years time. Alcoa’s Geelong smelter employs about 500 people and will close in August, while a nearby rolling mill, and a second mill and recycling facility in Yennora, New South Wales State, which employs about 480 people, will close by the end of the year, the company said.
Restructuring charges related to closures are expected at between US$250 million and US$270 million, Alcoa said.
“The two rolling mills serve the domestic and Asian can sheet markets, which have been impacted by excess capacity,” it said.
Alcoa’s other Australian assets — the Portland aluminum smelter in Victoria and its bauxite mining and alumina refining operations in Western Australia — will continue to operate normally, the company said.