Company to curtail aluminum smelter for two
years with commitment to restart
Alcoa Corporation (NYSE: AA) and the workers’ representatives at
the Company’s San Ciprián aluminum plant in Spain have reached an
agreement aimed at resolving ongoing challenges that stem from
exorbitant energy prices.
The agreement, which was signed on December 29, 2021, calls for
a two-year curtailment of the smelter’s 228,000 metric tons of
annual capacity, and a commitment by the Company to begin the
restart of the smelter in January 2024.
“With this agreement, we now have a path to resolve the
significant challenges that the facility has faced and can begin to
build a stronger smelter in two years,” said Alcoa President and
CEO Roy Harvey. “This has been a challenging road for everyone
involved, and we look forward to the future, working constructively
with our employees and stakeholders to implement the agreement we
reached.”
Curtailment activities will begin on January 1, 2022, with the
goal of completion before the end of January 2022. During the
curtailment period, Alcoa will seek to secure as soon as possible
long-term power purchase agreements, beginning from 2024. Also, the
Company has committed $68 million for capital investments and $35
million for restart costs. As part of the agreement, workers will
immediately cease a strike action that has affected both the
aluminum smelter and the alumina refinery.
In addition, the Company has committed to provide employees full
wages and benefits during the two-year curtailment period, to
extend the contracts of contractor companies through 2024, and to
provide a new collective bargaining agreement that includes pay
increases extending to the end of 2025. The Company also has
committed that no collective dismissal process will be considered
for the San Ciprián smelter until December 31, 2025 at the
earliest.
As a result of the agreement, Alcoa expects to record
restructuring-related charges in the fourth quarter 2021 of
approximately $60 million (pre- and after-tax), or $0.32 per share,
with approximately half of the costs to be paid in each of 2022 and
2023.
As a result of the described curtailment and the agreement,
Alcoa expects the San Ciprián aluminum plant to record an annual
net loss before taxes of approximately $20 to $25 million in 2022,
based on current market prices. In 2021, the aluminum plant is
projected to record a net loss before taxes of approximately $65
million, with most of the impact in the fourth quarter based on
increased power prices. The month to date December 2021 average
spot market power price in Spain is $276 per megawatt hour.
During the curtailment, the casthouse will continue to operate,
and the San Ciprián alumina refinery will continue to operate
normally.
About Alcoa Corporation
Alcoa (NYSE: AA) is a global industry leader in bauxite,
alumina, and aluminum products, and is built on a foundation of
strong values and operating excellence dating back 135 years to the
world-changing discovery that made aluminum an affordable and vital
part of modern life. Since developing the aluminum industry, and
throughout our history, our talented Alcoans have followed on with
breakthrough innovations and best practices that have led to
efficiency, safety, sustainability, and stronger communities
wherever we operate.
Dissemination of Company Information
Alcoa intends to make future announcements regarding company
developments and financial performance through its website,
www.alcoa.com, as well as through press releases, filings with the
Securities and Exchange Commission, conference calls, and
webcasts.
Forward-Looking Statements
This press release contains statements that relate to future
events and expectations, including those relating to the
curtailment of the smelter and associated commitments and
activities and the Company’s expectations regarding the timing of
the activities and estimates of the associated financial impact,
and as such constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include those containing such words as
“ambition,” “anticipates,” “believes,” “could,” “develop,”
“endeavors,” “estimates,” “expects,” “forecasts,” “goal,”
“intends,” “may,” “outlook,” “plans,” “potential,” “projects,”
“reach,” “seeks,” “sees,” “should,” “targets,” “will,” “working,”
“would,” or other words of similar meaning. All statements by Alcoa
Corporation that reflect expectations, assumptions or projections
about the future, other than statements of historical fact, are
forward-looking statements. Forward-looking statements are not
guarantees of future performance and are subject to known and
unknown risks, uncertainties, and changes in circumstances that are
difficult to predict. Although Alcoa Corporation believes that the
expectations reflected in any forward-looking statements are based
on reasonable assumptions, it can give no assurance that these
expectations will be attained, and it is possible that actual
results may differ materially from those indicated by these
forward-looking statements due to a variety of risks and
uncertainties. Additional information concerning factors that could
cause actual results to differ materially from those projected in
the forward-looking statements is contained in Alcoa Corporation’s
filings with the Securities and Exchange Commission. Alcoa
Corporation disclaims any obligation to update publicly any
forward-looking statements, whether in response to new information,
future events or otherwise, except as required by applicable
law.
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version on businesswire.com: https://www.businesswire.com/news/home/20211229005367/en/
Investor Contact: James Dwyer 412-992-5450 James.Dwyer@alcoa.com
Media Contact: Jim Beck 412-315-2909 Jim.Beck@alcoa.com
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