Aluminum-industry leader Alcoa on Thursday said it is reducing its global smelting capacity by 12%, citing the need to become more competitive.
"The company will permanently close its smelter in Alcoa, Tenn., which was curtailed in 2009, along with two of the six idled potlines at its Rockdale, Texas, smelter," the company said in a statement.
"Together, these closures will reduce Alcoa's global smelting capacity of 4.5 million metric tons per year by 291,000 metric tons, or about 7%.
"The curtailments, to be announced in the near future, will reduce Alcoa's global smelting capacity by an additional 240,000 metric tons, or about 5%."
The company said no jobs will be lost as a result of the move.
Alcoa has seen its earnings hit by lower metal prices as the European economy has stumbled.
Alcoa said its net income for the three months to Sept. 30 was $172 million, on sales of $6.4 billion, compared with earnings of just $61 million on $5.3 billion in sales for the year-earlier quarter.
But lower aluminum prices meant the quarter's net profit was nearly half of the previous quarter's $322 million, while total sales were only down 2.5%, the company said.
"The closures highlight one of Alcoa's pressing issues: that of owning old smelters with high cash costs. Although refurbished, the Alcoa smelter was commissioned in 1914 and Rockdale dates to 1952," said analysts at BMO Capital Markets.
"Given BMO Research and consensus forecasts for the [fourth-quarter] profit release due Monday, Jan. 9, Alcoa's headline earnings will now almost certainly be negative."
Copyright Agence France-Presse, 2011
