Smelter, Rolling Mills Closing Down Under

Wednesday, February 19, 2014 @ 09:02 AM gHale

Alcoa Inc. will close its Point Henry aluminum smelter and two rolling mills in Australia.

Alcoa is shutting the 50-year-old smelter after a two-year review found no prospect of it becoming financially viable.

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Australia was once one of the world’s biggest aluminum producing countries but has slipped to fifth as costs of production climbed and prices dropped.

Point Henry’s closure in August will eliminate around 190,000 metric tons of annual aluminum-making capacity, equal to about 10 percent of Australia’s total yearly output.

“These assets are no longer competitive and are not financially sustainable today or into the future,” Alcoa Chief Executive Klaus Kleinfeld said.

Including the Point Henry smelter, Alcoa will close or curtail 551,000 metric tons of smelting capacity, exceeding the 460,000 metric tons placed under review in May 2013.

“The global oversupply of aluminum has devastated our industry,” said Paul Howes, national secretary for the Australian Workers Union, adding the union tried in vain to save nearly 1,000 jobs set to be lost at the smelter.

Alcoa’s closure of Point Henry also turns attention back to the troubled aluminum operations in Australia and New Zealand owned by Rio Tinto.

In August, Rio Tinto abandoned plan to spin off its Pacific Aluminum business housing 13 underperforming smelting and alumina-making businesses after failing to find any buyers.

At Rio’s Bell Bay smelter in the Australian island of Tasmania, union workers have agreed to forego guaranteed pay increases in exchange for greater job security.

Rio Tinto shut a 100,000-metric-ton-per-year smelter in Shawinigan, Quebec last year, while Norsk Hydro’s 180,000-metric-ton Kurri Kurri smelter also closed.

At the end of last year, Aluminum Delfzijl, the last remaining smelter in the Netherlands, with annual capacity of 110,000 metric tons, applied for bankruptcy.

Russia’s Rusal, the world’s biggest aluminum producer, estimates that producers outside of China eliminated up to 1.2 million metric tons of capacity last year and further reductions of 1 million-1.5 million tons could come this year.

While Alcoa and other established producers shutter old facilities that can no longer compete, China’s aluminum industry is growing. China’s production increased by six percent to 21.5 million metric tons last year alone.

Lower energy costs have encouraged higher output at smelters in China’s northwest provinces as well as restarts in the heavily industrialized provinces of Guangxi and Sichuan.

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