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January 5, 2012
Alcoa to Close or Curtail 531,000 Metric Tons of Smelting Capacity
12 Percent Reduction in System Capacity will improve cost position
NEW YORK--Alcoa (NYSE: AA) announced today that it intends to close or curtail
approximately 531,000 metric tons, or 12 percent of its global smelting
capacity, to lower the Company’s position on the global aluminum cost
curve and improve Alcoa’s competitiveness.
The Company will permanently close its smelter in Alcoa, Tennessee,
which was curtailed in 2009, along with two of the six idled potlines at
its Rockdale, Texas smelter. 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 percent.
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 percent.
“These are difficult but necessary steps to improve Alcoa’s
competitiveness, preserve and grow shareholder value and protect jobs in
the rest of the Alcoa system,” said Alcoa Chairman and CEO Klaus
Aluminum prices have fallen more than 27 percent from their peak in
2011. In addition to the curtailments, the Company will accelerate
actions to reduce the escalating cost of raw materials.
Kleinfeld added that Alcoa will work with all affected communities to
explore ways to redevelop closed facilities and will consult with
employees and work unions/councils impacted by curtailments. “We
recognize our responsibility to the people and communities of the
affected facilities,” he said.
The curtailments are expected to be complete by the first half of 2012.
Alcoa’s alumina production will be reduced across the global refining
system to reflect the final curtailments in smelting as well as
prevailing market conditions. The curtailments will contribute to the
Company’s long-term goal of lowering Alcoa’s position on the world
aluminum production cost curve by 10 percentage points.
Total restructuring-related charges for fourth quarter 2011, principally
composed of the above actions, are expected to be between $155 million
and $165 million after-tax, or $0.15 to $0.16 per share, of which
approximately 60 percent is non-cash.
Alcoa is the world’s leading producer of primary and fabricated
aluminum, as well as the world’s largest miner of bauxite and refiner of
alumina. In addition to inventing the modern-day aluminum industry,
Alcoa innovation has been behind major milestones in the aerospace,
automotive, packaging, building and construction, commercial
transportation, consumer electronics and industrial markets over the
past 120 years. Among the solutions Alcoa markets are flat-rolled
products, hard alloy extrusions, and forgings, as well as Alcoa® wheels,
fastening systems, precision and investment castings, and building
systems in addition to its expertise in other light metals such as
titanium and nickel-based super alloys. Sustainability is an integral
part of Alcoa’s operating practices and the product design and
engineering it provides to customers. Alcoa has been a member of the Dow
Jones Sustainability Index for 10 consecutive years and approximately 75
percent of all of the aluminum ever produced since 1888 is still in
active use today. Alcoa employs approximately 61,000 people in 31
countries across the world. More information can be found at www.alcoa.com.
This release contains statements that relate to future events and
expectations and as such constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include those containing such words as
“anticipates,” “estimates,” “expects,” “goal,” “plans,” “should,” “will”
or other words of similar meaning. All statements that reflect Alcoa’s
expectations, assumptions or projections about the future other than
statements of historical fact are forward-looking statements, including,
without limitation, forecasts concerning global demand for aluminum or
other trend projections, anticipated financial results or operating
performance, and statements about Alcoa’s strategies, goals, targets,
outlook and business and financial prospects. Forward-looking statements
are subject to a number of known and unknown risks, uncertainties, and
other factors and are not guarantees of future performance. Important
factors that could cause actual results to differ materially from those
expressed or implied in the forward-looking statements include:
(a) material adverse changes in aluminum industry conditions, including
global supply and demand conditions and fluctuations in London Metal
Exchange-based prices for primary aluminum, alumina and other products;
(b) deterioration in global economic or financial market conditions
generally; (c) unfavorable changes in the end markets served by Alcoa,
including automotive, aerospace, building and construction,
distribution, packaging, and industrial gas turbine markets; (d) Alcoa’s
inability to mitigate impacts from increases in energy costs or the
costs of other raw materials, including aluminum fluoride, calcined
petroleum coke, cathodes, anodes, caustic soda or liquid pitch;
(e) Alcoa’s inability to achieve the level of cost savings, improvement
in profitability and margins, revenue growth, cash generation, fiscal
discipline, or strengthening of operations (including moving its
smelting and refining businesses down on the industry cost curve and
increasing revenues in its Flat-Rolled Products and Engineered Products
and Solutions segments) anticipated from its restructuring programs,
productivity improvement, cash sustainability and other initiatives;
(f) political, economic, and regulatory risks in the countries in which
Alcoa operates or sells products, including the impact of changes in
foreign currency exchange rates on costs and results, and unfavorable
changes in laws and governmental policies, civil unrest, and other
events beyond Alcoa’s control; (g) the outcome of contingencies,
including legal proceedings, government investigations, and
environmental remediation; and (h) the other risk factors summarized in
Alcoa’s Form 10-K for the year ended December 31, 2010, Forms 10-Q for
the quarters ended March 31, 2011, June 30, 2011 and September 30, 2011,
and other reports filed with the Securities and Exchange Commission.
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.