The world’s largest aluminum company US-based Alcoa Inc plans to close three European smelters. The closures affect two smelters in Spain and one in Italy, and are part of the company’s strategy to restructure its global primary products unit.
Alcoa plans to close the Portovesme in Italy facility permanently, while the La Coruna and Aviles in Spain facilities would be closed partially and temporarily. The closures affects 1,500 employees. The company told reporters in a written statement that the total number of employees who would lose their jobs would not be determined until consultations are completed.
Closing the three facilities reduces Alcoa’s global smelting capabilities by 5%.
The announcement comes just a week after the company told reporters it plans to permanently close its Tennessee smelter along with two Rockland, Texas, potlines.
All the closures are part of a plan to cut operating costs.
Alcoa Reports Loss
Alcoa reported a loss for the fourth quarter 2011 of $191 million. Included in this figure is $159 million in revamping charges.
This is the first time the company reported a loss since first quarter 2010.
The losses can be attributed to aluminum prices falling as well as a decrease in sales. Aluminum prices fell 27% between April 2011 and the end of the year, including a 12% drop in the third quarter alone.
Sales are also down. Alcoa counts on the United States and Europe for slightly more than 75% of its sales. Aluminum sold by Alcoa is used in the automobile industry, aerospace industry, construction, commercial transportation, commercial turbines and other industrial products.
In addition to rising aluminum prices and decreased sales, Alcoa also was affected by rising transportation and energy costs.
Overall, Alcoa reported a net income of $611 million and revenue of $25 billion for 2011. This compares to $254 million in net income and $21 billion in revenue for 2010.
Chief executive officer Klause Kleinfeld told the New York Times he feels the company’s revenue will continue to be hurt by decreased sales and rising costs, but that demand for aluminum will increase by 7% in 2012.
Alcoa sees demand in China rising; the Chinese use aluminum for construction, the automobile industry and beverage cans.
Key Statistics - Global Aluminum Market (source: MarketLine)
- In 2010, the global aluminum industry’s revenue was $83 billion. This represents a compound annual growth rate (CAGR) of only 0.2% for 2006-2010.
- Between 2006-2010, the industry’s production volumes increased by a CAGR of 4.7%. In 2010, it reached a total of 37 million tons.
- The industry is predicted to grow by a CAGR of 11.3% between 2010-2015. By 2016, the industry is predicted to be valued at $142 billion.