Alcoa to continue operating its aluminium smelter in Victoria, at least till mid-2021

Alcoa will reportedly continue operating its aluminium smelter in Victoria, despite a significant net global loss last year.

According to the report, while Alcoa reported a $1.12 billion net global loss in 2019, the smelter received $200 million in Australian government subsidies as part of a four-year packaging ending in 2021. President Roy Harvey reasoned the loss saying “Australia has one of the highest energy price markets on the planet.”

Alcoa is its Fourth Quarter and Full Year 2019 Results said that it expects some benefits from the lower costs of raw materials in 2020, but at the same time presumes the benefits to be offset by “higher energy costs, lower rolled products shipments, and unfavourable price and mix.”

Alcoa recently sold its waste treatment facility in Gum Springs, Arkansas, in a transaction valued at $250 million, followed after reviewing its assets to drive lower costs and sustainable profitability in October 2019.

The review is being conducted over the next five years and will include analysis of existing production capacity to consider opportunities for significant improvement, potential curtailments, closures, or divestitures, focusing on 1.5 million tonnes of global smelting capacity and 4 million tonnes of global alumina refining capacity.

As per the news, the smelter in Victoria will, however continue operating until at least mid-2021 because according to Harvey, the deal between Alcoa and the Australian and Victorian governments would go out to the middle of 2021.

The company is also in talks with the governments about finding an electricity solution for its loss-making Portland smelter.  

Harvey said, “It is a plant that operates very stably, it is a good technology, it just happens to be one of the most-highest energy price markets on the planet.”