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 aluminium 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 aluminium smelting and alumina refining, having reached the 43rd percentile on the global aluminium 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% is non-cash.