Alcoa 'Comfortable' that Brazil Will Soon Cut Energy Costs

Date : 06/13/2012 @ 3:30PM
Source : Dow Jones News
Stock : Arconic Inc. (ARNC)
Quote : 25.92  0.75 (2.98%) @ 5:07PM

Alcoa 'Comfortable' that Brazil Will Soon Cut Energy Costs

Alcoa (NYSE:AA)
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   By Diana Kinch 
 

RIO DE JANEIRO--Global aluminum producer Alcoa Inc. (AA) said Wednesday it is "comfortable" that the Brazilian government will reduce electrical energy costs in the short to medium term.

"President Dilma Rousseff leads us to believe action on energy prices will be similar to the action to reduce interest rates," Franklin L. Feder, Alcoa's chief executive for Brazil and Latin America, told reporters in Rio de Janeiro.

Last month, Brazil's Central Bank reduced the country's base interest rate to 8.5%, a historically low level for the country although still high by international standards.

Aluminum production in Brazil is currently globally uncompetitive due to energy costs that have become the highest in the world, Feder said, with surcharges and tariffs accounting for 50% of electrical energy costs.

Last week, Alcoa executives met with President Rousseff to discuss the issue, he said.

Alcoa has already closed aluminum-production lines in Brazil's Rio de Janeiro and Bahia states but isn't currently planning any further closures, Feder said.

Write to Diana Kinch at diana.kinch@dowjones.com.

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