As part of its sustained push to reorganize its business around core operations, Alcoa Corporation finalized the sale of a hazardous waste treatment plant in Gum Springs, Alabama on February 3. The metals giant is attempting to sell off non-core businesses in the midst of its second restructuring since 2016.
Alcoa Corp. received $200 million in cash for the 1,300-acre plant; they’re promised $50 million more, pending certain post-closing conditions. Alcoa expects to gain $175 million in the first quarter of 2020, and hopes to improve its annual net income by $10 million.
The Pittsburgh-based aluminum, bauxite and alumina corporation reported a net loss of $303 million in the fourth quarter of 2019, rounding out a full-year net loss of $1.12 billion. In a statement, CEO Roy Harvey said, “In 2019, we acted to further strengthen Alcoa, completing the divestiture of uncompetitive assets, modernizing labor agreements in three countries, implementing a new operating model, and making quick progress on the asset review process we announced last quarter.”
He praised the company’s “strong” cash balance of nearly $900 million and record-breaking bauxite and alumina production, but acknowledged the 2019 market “challenged” Alcoa, as a world surplus of metals—caused, in part, by Chinese companies overproducing—caused prices to plummet. At the time, Alcoa predicted global aluminum supply would exceed demand by a million metric tons in 2020.
The sale of the Gum Springs waste treatment plant is the first non-core asset sale executed by Alcoa Corp. since it announced an asset review in October 2019, and will provide at least $200 million towards Alcoa’s planned goal of $500 million to $1 billion in non-core asset sales announced October 2019.
Alcoa isn’t just selling off non-core assets to stem its losses. In November 2019, Alcoa re-organized its executive team and reduced the number of positions on it from 12 to seven.
In December, Alcoa announced they would permanently close their Point Comfort alumina refinery in Texas, saving $15 million net income. On December 31, Alcoa completed the transfer of the Afobaka hydroelectric dam to the government of Suriname. Alcoa continued to operate the dam and sell its electricity after ceasing bauxite operations in 2017. That is expected to improve Alcoa’s net annual income by about $20 million.
