Alcoa to Halt Production at Australian Refinery By Investing.com
PITTSBURGH – Alcoa Corporation announced plans to fully curtail production at its Kwinana Alumina Refinery in Western Australia. The process will begin in the second quarter of 2024 and will result in a phased reduction of the workforce.
The Kwinana refinery, which has been operating at about 80% capacity since January 2023, is scheduled to cease all alumina production by the third quarter of this year.
Alcoa’s Executive Vice President and Chief Operations Officer, Matt Reed, cited several factors influencing the decision, including the aging facility, its scale, operating costs, bauxite grades, and market conditions. He acknowledged the significant impact this curtailment would have on employees, business partners, and the local community. Alcoa has committed to supporting the transition of its workforce, which will be reduced from around 800 employees to about 50 by the third quarter of 2025.
Alcoa’s port facilities near the refinery will continue operations, facilitating import and export activities linked to the company’s Pinjarra Alumina Refinery. The curtailment of the Kwinana site is not expected to affect production at the Pinjarra and Wagerup refineries.
Following the curtailment, Alcoa anticipates an annual improvement of approximately $70 million starting in the third quarter of 2024. However, the Kwinana refinery will still incur around $40 million in non-cash expenses annually while production is halted. Additionally, the company expects to record restructuring charges between $180 million and $200 million in the first quarter of 2024 related to this curtailment.
This decision by Alcoa will have significant consequences for the Australian community and workforce. The reduction in operations at the Kwinana Alumina Refinery reflects a culmination of factors, including the condition and size of the facility, operating costs, the quality of bauxite used, and evolving market conditions. Despite these challenges, Alcoa remains committed to providing support for affected employees and minimizing the impact on the local community.
While the curtailment of the Kwinana refinery will have far-reaching effects, Alcoa aims to ensure that its other facilities and operations, such as the Pinjarra and Wagerup refineries, continue to operate smoothly. Furthermore, the company’s port facilities near Kwinana will remain operational, facilitating the import and export activities associated with the Pinjarra refinery.
Alcoa projects a positive financial impact after the curtailment, with an anticipated improvement of approximately $70 million per year, starting in the third quarter of 2024. However, during the production halt, the Kwinana refinery will still incur non-cash expenses totaling around $40 million annually. To address the costs associated with this decision, Alcoa expects to record restructuring charges between $180 million and $200 million in the first quarter of 2024.
This announcement by Alcoa highlights the complex dynamics shaping the alumina production industry and the challenges faced by individual refineries. Alcoa’s decision to halt production at its Kwinana refinery underscores the need for ongoing adaptation to changing market conditions and the requirement for operational efficiency. The company seeks to navigate these challenges while mitigating the impact on its employees and the communities where it operates.
As one of the world’s leading producers of alumina, Alcoa is well aware of the various factors that influence the industry. The curtailment of the Kwinana refinery represents a strategic decision in response to a range of considerations. Alcoa intends to work closely with its employees, business partners, and the wider community to manage the transition and minimize the effects of this decision.
In conclusion, Alcoa Corporation plans to halt production at its Kwinana Alumina Refinery in Western Australia. The decision comes after a detailed evaluation of various factors, including the aging facility, operating costs, bauxite grades, and market conditions. Alcoa aims to provide support to its affected workforce while ensuring continuity at its other facilities and operations. The company expects both financial benefits and associated costs due to this curtailment and remains committed to navigating the challenges of the industry while focusing on employee welfare and community well-being.
