Alcoa Continues Reshaping Upstream Business, 443,000 Metric Tons of Suralco’s Refining Capacity to be Curtailed
March 17 2015 - 2:33PM
Business Wire
Alcoa and Government of Suriname pursuing
potential transfer of Suralco to Government and sustaining
country’s bauxite industry
Lightweight metals leader Alcoa (NYSE: AA) today announced that
it plans to curtail 443,000 metric tons per year (mtpy) of alumina
refining capacity at Suralco in Suriname. In addition, the Company
and the Government of Suriname have agreed to pursue a transaction
for a Government-owned entity to acquire the Suralco
operations.
The curtailment and potential transaction are in line with
Alcoa’s recent announcement to review upstream capacity for
possible curtailment or divestiture and the Company’s strategic
goal to create a globally competitive commodity business. The
curtailment, which represents one digester, is expected to be
complete by April 30, 2015.
“Reducing the production of the refinery will assist in
extending the life of the operations as we continue to work with
the Government of Suriname on the transaction,” said Bob Wilt,
President Alcoa Global Primary Products. “We are committed to
working with the Government to find the best solution for the
Suralco facility.”
In October 2014, the Government and Alcoa signed a Memorandum of
Understanding reflecting both parties’ intent to find a solution
for the future of Suralco, which operates in a challenging global
environment, with limited bauxite reserves and lacks a long-term
energy solution. The resulting discussions between the parties have
led to the Government’s decision to sustain the bauxite industry in
Suriname.
Both parties now intend to pursue a transaction where a
Government-owned entity would acquire Suralco, including the
mining, refining and Afobaka hydroelectric operations. Following
the appropriate due diligence, the parties are targeting to reach
agreement on the proposed transaction by July 1, 2015.
The Company will work closely with unions and employees to
reduce the impact of the curtailment on affected employees by
offering fair severance packages. The Paranam refinery and related
mining operations employ approximately 700 people, in addition to
contracted personnel.
The net financial impact associated with the curtailment is not
expected to be material to the Company’s earnings.
Alcoa’s review of its refinery operations is consistent with the
Company’s goal of lowering its position on the world alumina cost
curve to the 21st percentile and the aluminum production cost curve
to the 38th percentile, by 2016.
Suralco’s total refining capacity is 2.2 million mtpy, with
876,000 mtpy currently idled. Suralco is part of the Alcoa World
Alumina and Chemicals group of companies owned 60 percent by Alcoa
Inc. and 40 percent by Alumina Limited.
About Alcoa
A global leader in lightweight metals technology, engineering
and manufacturing, Alcoa innovates multi-material solutions that
advance our world. Our technologies enhance transportation, from
automotive and commercial transport to air and space travel, and
improve industrial and consumer electronics products. We enable
smart buildings, sustainable food and beverage packaging,
high-performance defense vehicles across air, land and sea, deeper
oil and gas drilling and more efficient power generation. We
pioneered the aluminum industry over 125 years ago, and today, our
approximately 59,000 people in 30 countries deliver value-add
products made of titanium, nickel and aluminum, and produce
best-in-class bauxite, alumina and primary aluminum products. For
more information, visit www.alcoa.com, follow @Alcoa on Twitter at
www.twitter.com/Alcoa and follow us on Facebook at
www.facebook.com/Alcoa.
Forward-Looking Statements
This release contains statements that relate to future events
and expectations 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 “estimates,” “expects,” “goal,” “intends,” “plans,”
“proposes,” “should,” “target,” “will,” or other words of similar
meaning. All statements that reflect Alcoa’s expectations,
assumptions or projections about the future other than statements
of historical fact are forward-looking statements, including,
without limitation, statements regarding Alcoa’s goal to create a
globally competitive commodity business, the expected timing for
completing the curtailment of the Suralco refining capacity, the
expected financial impact of the curtailment, and the expected
timing for reaching an agreement on a proposed transaction with the
Government of Suriname regarding the Suralco operations.
Forward-looking statements are subject to risks, uncertainties and
other factors and are not guarantees of future performance.
Important factors that could cause actual results to differ
materially from those expressed or implied in the forward-looking
statements include: (a) material adverse changes in aluminum
industry conditions, including global supply and demand conditions
and fluctuations in London Metal Exchange-based prices and
premiums, as applicable, for primary aluminum, alumina, and other
products, and fluctuations in indexed-based and spot prices for
alumina; (b) Alcoa’s inability to successfully realize goals
established in each of its four business segments, at the levels or
by the dates targeted for such goals (including moving its alumina
refining and aluminum smelting businesses down on the industry cost
curves and increasing revenues in its Global Rolled Products and
Engineered Products and Solutions segments); (c) political,
economic, and regulatory risks in the countries in which Alcoa
operates, including unfavorable changes in laws and governmental
policies, tax rates, civil unrest, or other events beyond Alcoa’s
control; (d) the failure to extend the life of the Suralco
operations as expected due to exhaustion of the bauxite, delay in
curtailment of the refining capacity, or other reasons; (e) changes
in preliminary accounting estimates due to the significant
judgments and assumptions required; (f) the outcome of
contingencies, including legal proceedings and environmental
remediation; and (g) the other risk factors summarized in Alcoa’s
Form 10-K for the year ended December 31, 2014, and other reports
filed with the Securities and Exchange Commission. Alcoa 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.
AlcoaInvestor ContactNahla Azmy, + 1
212-836-2674Nahla.azmy@alcoa.comorMedia ContactSonya Elam Harden, +
1 864-836-2078Sonya.harden@alcoa.com
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