Alcoa expects a reduction in Q2 alumina shipments from Australia due to weather disruptions, alongside higher refinery fuel costs in Brazil.
Molly Beerman, Executive Vice President and Chief Financial Officer at Alcoa, spoke at the recent Wells Fargo Industrials and Materials Conference in Chicago, Illinois, USA.
She outlined that production at Alcoa’s Pinjarra alumina refinery in Australia had been further complicated by LNG supply disruption from Cyclone Narelle.
Therefore, she expected higher production costs of $30 million, as well as a 120,000-tonne reduction in third-party shipments for the second quarter compared to the first.
She said: “Our refineries in Western Australia are really challenged.
“They're running the poor bauxite quality there, so [they are] under significant cost pressure at this low [Alumina Price Index] API.
“So, the [alumina] segment, as a whole, will be underwater.”
Meanwhile, she expected additional fuel costs of $15 million at the Alumar refinery in São Luís, Brazil, due to higher pricing caused by conflict in the Middle East.
However, the refinery remains profitable overall, hitting record production and benefiting from a $30 per tonne Atlantic premium.
The refinery is owned by Alcoa (54%), South32 (36%), and Rio Tinto (10%).
The full transcript of her talk is available here.
