Alcoa to stop remaining 230,000 tonnes of capacity at Intalco smelter; Company shares full-year outlook

Alcoa Corporation, in its first-quarter financial results on Thursday, April 23, announced that it would curtail the remaining 230,000 tonnes of uncompetitive smelting capacity at Intalco smelter in Ferndale, Washington, owing to the current downturn market conditions. The full curtailment, including 49,000 tonnes of earlier-curtailed capacity at Intalco, is likely to be completed by the end of July 2020.

Post this action, Alcoa’s total smelting capacity cut will come in at 880,000 tonnes, or approximately 30 percent of its total global smelting capacity.

Roy Harvey, Alcoa’s President and Chief Executive Officer, said: “While our employees have worked diligently to improve the facility, the smelter is uncompetitive, and current market conditions have exacerbated the facility’s challenges.”

With this cut, all 700 employees at Intalco will lose jobs. Harvey said: “This is difficult because of the impact on our employees, and we will ensure appropriate support as we work to safely curtail the facility.”

Alcoa also mentioned its outlook for 2020 in the first-quarter results, where it said its estimated shipments would approximately range between 2.9 million tonnes and 3 million tonnes, instead of the earlier outlook between 3 and 3.1 million tonnes, primarily because of Intalco’s capacity cut during the second half of 2020.

So far, the bauxite and alumina are concerned, Alcoa’s outlook remained unchanged from the prior estimates. The company's total annual bauxite shipments are expected to hover at 48 to 49 million tonnes, while alumina shipments at 13.6 to 13.7 million tonnes. In the aluminium segment, the company expects performance to be nearly flat, as improvements from lower alumina costs, smelter power costs, and production costs are anticipated to be offset by lower Brazil Hydro sales prices and lower value add pricing and volumes.

Alcoa, however, concluded that since the extent and duration of the COVID19 pandemic are unknown, there’s uncertainty around the future impact on the company's business, and therefore, its financial and operational outlook may differ in reality.