April 29, 2009

Plan for management of Portland Aluminium through downturn

In the face of continued global market softness, Portland Aluminium has today announced its joint venture partners have independently elected to curtail smelting production in addition to the previously announced curtailment there, bringing the total smelting reduction to 15 per cent of production by July 2009. 

The business will also work consultatively with employees, unions, contractors and suppliers to achieve an overall 10-15 per cent cost reduction by the end of 2009.
In December 2008, Alcoa of Australia curtailed 15,000 tonnes of its production share as part of an effort to match production with demand across the globe. 
Today the joint venture partners have independently elected to reduce production by an additional 38,000 tonnes by 1 July 2009 (Alcoa of Australia proportion – 14,000 tonnes annualised, CITIC proportion- 12,000 tonnes annualised, Marubeni proportion – 12,000 tonnes annualised) bringing total production at the smelter to 305,000 tonnes.  Alcoa of Australia’s curtailment will be implemented as part of Alcoa’s previously announced plan to reduce global production by 850,000 mtpy.
The units of production being curtailed are linked to overall market conditions including high energy costs. This further curtailment now sees normal production of 358,000 tonnes per annum reduced by approximately 53,000 tonnes to 305,000 tonnes.
Alan Cransberg, Managing Director of Alcoa of Australia, an ultimate 55 per cent owner of Portland Aluminium, said the additional curtailment and reduction in controllable costs exemplify the extraordinary measures businesses are taking to stay strong through the economic downturn and softened market demand.

“Portland Aluminium has been a strong and high performing business but, as with many other businesses around the world, we are facing economic challenges which require us to take decisive action now for a strong business in the future.”
"These times are not easy on anyone but we will do our best to minimise the impacts on our people, our contractors, our suppliers, and our communities. We will work consultatively with these groups to identify opportunities to reposition the business for the long-term, to ensure we emerge stronger as the economy recovers,” said Mr Cransberg.

“We want to avoid job losses wherever possible, so we will be trying to use a range of workforce initiatives with our people to lower costs and manage through this downturn.

“Portland Aluminium’s long-term future remains bright. However in the current economic environment and with the cost impacts associated with an impending carbon pollution reduction scheme, it’s critical we focus our efforts on continuing to rapidly reduce our costs in the short-term while working together to meet these challenges for a sustainable long-term future.”
Editor’s Note:
About Portland Aluminium
The Portland Aluminium smelter, located 5 kilometres south of Portland in South West Victoria, is an unincorporated joint venture project between Alcoa of Australia Limited (45%), Eastern Aluminium (Portland) Pty Ltd (10%), CITIC Nominees Pty Limited (22.5%) and Marubeni Aluminium Australia Pty Ltd (22.5%).

Eastern Aluminium (Portland) Pty Ltd is a wholly owned subsidiary of Alcoa of Australia Limited. Alcoa Portland Aluminium Pty Ltd, also a wholly owned subsidiary of Alcoa of Australia Limited,  manages the day to day operation of the smelter on behalf of the participants.