Closure Furthers Alcoa’s Strategy to Lower Cost Base in Commodity Business
Alcoa (NYSE: AA) today announced it will permanently close the remaining
two potlines at its Massena East smelter in New York in the first
quarter of this year. The decision was made because the potlines are no
longer competitive. One of three potlines at the facility was
permanently closed in August 2013. The closure will reduce Alcoa’s
smelting capacity by 84,000 metric tons. The Massena West facility will
continue to operate.
“We will be working with our unions, state, local and other stakeholders
to minimize the impact of these changes,” said Bob Wilt, president of
Alcoa Global Primary Products. “We appreciate the support of the New
York Power Authority and will work with them and others to ensure our
continuing success at Massena West.”
Alcoa’s review of its primary metals operations is consistent with the
Company’s 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.
In 2013, the Company met its goal of lowering its cost position in both
aluminum smelting and alumina refining, having reached the 43rd
percentile on the global aluminum cost curve, and 27th percentile on the
global alumina cost curve. These shifts represent an 8 point movement
and 3 point movement, respectively, since 2010.
Including the closure of the remaining two potlines at Massena East,
Alcoa has announced closures or curtailments representing 361,000 metric
tons of the 460,000 metric tons placed under review in May of 2013. Once
the Massena East potline closure is complete, Alcoa will have total
smelting operating capacity of 3,950,000 metric tons, with approximately
655,000 metric tons of capacity idle.
“We are taking decisive action to close the remaining potlines, given
they are no longer competitive,” Wilt added. “We continue to reshape our
commodity business to ensure it is positioned for long-term success.”
Total restructuring-related charges for the first quarter of 2014
associated with the above closure are expected to be between $60 and $70
million after-tax, or $.06 per share, of which approximately 40 percent
is non-cash.
About Alcoa
Alcoa is a global innovation leader in lightweight metals, products and
solutions. Its technology, expertise and industry reach continue to
advance automotive and aerospace transportation, building and
construction, consumer electronics and packaging, defense applications
across air, land and sea, and the oil and gas industry. Alcoa pioneered
the modern-day aluminum industry 125 years ago and today is a leader in
delivering value-add products made from a range of lightweight metals
and flat-rolled aluminum. Alcoa is also a world leading producer of
primary aluminum, as well as the world’s largest miner of bauxite and
refiner of alumina. Alcoa has been a member of the Dow Jones
Sustainability Index for 12 consecutive years and approximately 75
percent of all of the aluminum ever produced since 1888 is still in
active use today. Alcoa employs approximately 60,000 people in 30
countries around the world. For more information, visit www.alcoa.com,
follow @Alcoa on Twitter at www.twitter.com/Alcoa
and follow us on Facebook at www.facebook.com/Alcoa.
Forward-Looking Statements
This release contains statements that relate to future events and
expectations and as such constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include those containing such words as
“estimates,” “expects,” “goal,” “is scheduled,” “plans,” “will,” or
other words of similar meaning. All statements that reflect Alcoa’s
expectations, assumptions or projections about the future other than
statements of historical fact are forward-looking statements, including,
without limitation, forecasts concerning targeted financial results or
operating performance, and statements about Alcoa’s strategies, outlook,
and business and financial prospects. Forward-looking statements are
subject to a number of known and unknown risks and uncertainties, and
are not guarantees of future performance. Important factors that could
cause actual results to differ materially from those expressed or
implied in the forward-looking statements include: (a) material adverse
changes in aluminum industry conditions, including global supply and
demand conditions and fluctuations in London Metal Exchange-based prices
and premiums, as applicable, for primary aluminum, alumina, and other
products, and fluctuations in indexed-based and spot prices for alumina;
(b) deterioration in global economic and financial market conditions
generally; (c) unfavorable changes in the markets served by Alcoa; (d)
Alcoa’s inability to achieve the level of revenue growth, cash
generation, cost savings, improvement in profitability and margins,
fiscal discipline, or strengthening of competitiveness and operations
(including moving its alumina refining and aluminum smelting businesses
down on the industry cost curves and increasing revenues in its Global
Rolled Products and Engineered Products and Solutions segments)
anticipated from its restructuring programs, productivity improvement,
cash sustainability, and other initiatives; (e) Alcoa’s inability to
complete its modernization programs or to realize expected benefits from
newly constructed, expanded, or acquired facilities, in each case as
planned and by targeted dates; (f) political, economic, and regulatory
risks in the countries in which Alcoa operates or sells products,
including unfavorable changes in laws and governmental policies, foreign
currency exchange rates, tax rates, civil unrest, or other events beyond
Alcoa’s control; (g) changes in preliminary accounting estimates due to
the significant judgments and assumptions required; and (h) the other
risk factors summarized in Alcoa’s Form 10-K for the year ended December
31, 2012 and other reports filed with the Securities and Exchange
Commission. Alcoa disclaims any obligation to update publicly any
forward-looking statements, whether in response to new information,
future events or otherwise, except as required by applicable law.
Alcoa
Investor Contact
Kelly Pasterick, +1-212-836-2674
Kelly.Pasterick@alcoa.com
or
Media Contact
Monica Orbe, +1-212-836-2632
Monica.Orbe@alcoa.com