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| September 30, 2008
Alcoa to Curtail Remainder of Rockdale, TX Smelter Due to Local Power Supply and Market Conditions
PITTSBURGH--(BUSINESS WIRE)--Alcoa (NYSE:AA) today announced it will curtail the remaining production
at its Rockdale, Texas aluminum smelter –
comprising approximately 150,000 metric tons of production a year (mtpy) –
beginning immediately as a result of uncompetitive power supply to that
smelter and overall market conditions. In June, the company idled three
of the plant’s six operating potlines
representing approximately 120,000 mtpy of production as a result of
ongoing local power supply issues.
As a result of the curtailment of the remainder of aluminum smelting in
Rockdale, approximately 660 employees will be laid-off in addition to
the approximately 160 employees who were impacted earlier. The company
will continue to operate its aluminum atomizer in Rockdale as well as
its anode operations there, employing a combined 140 people. Lay-offs at
the facility will be implemented in a phased process, with the majority
of the reductions occurring toward the end of November and in early
December. Additionally, Alcoa will adjust alumina production accordingly.
“When we initially curtailed half of our
aluminum production in Rockdale,” said John
Thuestad, President of Alcoa’s US Primary
Products business, “we said it would be
extremely challenging to try to be competitive operating only half of
the plant. Unfortunately, the cumulative effect of operating only half
of the smelter, well-known issues regarding the cost and long-term
reliability of the power supply in Rockdale, and current market
conditions, has forced us to make this difficult decision.
“The ongoing effort and dedication of our
employees and our community are what make this especially difficult,”
said Thuestad. “We will look to work with our
community and the region to ease the impact and try to return Rockdale
to being a globally competitive producer of metal.”
Alcoa will record a third quarter 2008 pre-tax charge of approximately
$48 million to cover the costs of the curtailment.
“Following this curtailment of smelting,
Alcoa will continue to pay its cost of generation from Sandow Unit 4 and
we will attempt to recover that cost by marketing the power in the Texas
energy market,” said Thuestad.
Bernt Reitan, Executive Vice President and Group President Alcoa Primary
Products, said, “Our re-powering efforts
across our global portfolio has gone extremely well –
such as our recent MOU in Quebec, covering approximately 25 percent of
our output, and elsewhere. We will continue to explore options to secure
a competitive long-term power solution that enables profitable operation
in Rockdale, just as we have done across the world.”
Alcoa is the world leader in the production and management of primary
aluminum, fabricated aluminum and alumina combined, through its active
and growing participation in all major aspects of the industry. Alcoa
serves the aerospace, automotive, packaging, building and construction,
commercial transportation and industrial markets, bringing design,
engineering, production and other capabilities of Alcoa's businesses to
customers. In addition to aluminum products and components including
flat-rolled products, hard alloy extrusions, and forgings, Alcoa also
markets Alcoa® wheels, fastening systems,
precision and investment castings, and building systems. The Company has
97,000 employees in 34 countries and has been named one of the top most
sustainable corporations in the world at the World Economic Forum in
Davos, Switzerland. More information can be found at www.alcoa.com.
Forward-Looking Statements
Certain statements in this release relate to future events and
expectations and as such constitute forward-looking statements involving
known and unknown risks and uncertainties that may cause actual results
of Alcoa to be different from those expressed or implied in the
forward-looking statements. Alcoa disclaims any obligation to update
publicly any forward-looking statements, whether in response to new
information, future events or otherwise, except as required by
applicable law. Important factors that could cause actual results to
differ materially from those in the forward-looking statements include:
(a) Alcoa's inability to mitigate impacts from significant increases in
energy costs or from interruptions in energy supplies due to equipment
failure, energy shortages, inability to extend energy contracts upon
expiration or to negotiate new arrangements on cost-effective terms, or
other causes; (b) material adverse changes in economic or aluminum
industry conditions generally, including global supply and demand
conditions and fluctuations in London Metal Exchange-based prices for
primary aluminum and other products; (c) material adverse changes in the
markets served by Alcoa, including the transportation, building and
construction, distribution, packaging, industrial gas turbine and other
markets; (d) Alcoa’s inability to mitigate
impacts from increases in the cost of raw materials or transportation or
other cost inflation, or from unfavorable currency fluctuations; and (e)
the other risk factors summarized in Alcoa's Form 10-K for the year
ended December 31, 2007, Quarterly Report on Form 10-Q for the quarter
ended June 30, 2008 and other reports filed with the Securities and
Exchange Commission.
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