Aluminum giant, Alcoa Inc. AA announced that it will curtail the remaining 74,000 metric tons of capacity at its Sao Luis facility in Brazil. In the upstream portfolio, Alcoa continues to take strategic actions, including reduction of high-cost operating smelting capacity, to create a globally competitive commodity business.
Once the Sao Luís facility is curtailed, Alcoa will have about 740,000 metric tons, or 21%, of its smelting capacity, offline. The procedure is expected to be complete by Apr 15, 2015. As a result of the curtailment the company expects to incur restructuring-related charges in the first quarter between $10 million and $15 million after-tax, or 1 cent per share.
On Mar 6, 2015, the company stated that it will evaluate 500,000 metric tons of smelting capacity and 2.8 million metric tons of refining capacity for possible curtailment, closure or sale. This curtailment adds to the 85,000 metric tons of capacity idled at Sao Luis in May 2014 and the 12,000 metric tons curtailed in Oct 2014. However, Alcoa stated that the refinery at Sao Luis will continue normal operations and will remain unaffected. .
Alcoa aims to move down the global aluminum cost curve to the 38th percentile and the global alumina cost curve to the 21st percentile by 2016. These actions will be taken in consultation with its stakeholders, and after thoroughly reviewing and determining the best outcome for them.
Few days ago, Alcoa also announced that it intends to cut 443,000 metric tons per year (mtpy) of alumina refining capacity at the Suralco facility in Suriname. Suralco, which is a part of the Alcoa World Alumina and Chemicals group of companies, is owned 60% by Alcoa and 40% by Alumina Limited. The curtailment is expected to be complete by Apr 30, 2015. The company remains committed to working with the Suriname government in order to find the best solution for the Suralco facility.
Alcoa currently carries a Zacks Rank #3 (Hold).
Better-ranked companies in the mining space include NovaCopper Inc. NCQ, Energy Fuels Inc. UUUU and Denison Mines Corp. DNN. While NovaCopper and Energy Fuels sport a Zacks Rank #1 (Strong Buy), Denison Mines holds a Zacks Rank #2 (Buy).
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