Alcoa Australia managing director Alan Cransberg blamed metal prices, rising costs and the soaring Australia.

“A combination of factors, including metal prices, input costs and exchange rates, have resulted in the Point Henry smelter becoming unprofitable,” he said.

"Together with our employees, we have worked hard to minimise costs and improve margins, but the current situation makes it difficult for Point Henry to be globally competitive in the foreseeable future."

While the company would try to turn the plant around, he acknowledged that one outcome was that the smelter 'may be curtailed'.

"I know this is unsettling news that creates uncertainty for our employees and the many people that depend on the smelter for their livelihood."

Alcoa hopes to complete the review by the end of June and make a decision about the smelter’s future then. The associated aluminium rolling mill at Point Henry and Anglesea power station are not included in the review.

The rising cost of energy is likely to be a key element to the Alcoa review. The Point Henry smelter uses about 2.5% of Victoria's total electricity supply. The company's Portland plant, which employs about 550 people, uses about 5% of the state's electricity.