Alcoa Corporation to Permanently Close Suralco Refinery
January 03 2017 - 4:39PM
Business Wire
Company to impair gas exploration assets in
Western Australia;No significant fourth quarter financial impact
from power outage at Portland Aluminum smelter
Alcoa Corporation (NYSE: AA) today announced that it intends to
permanently close the Suralco alumina refinery and bauxite mines in
Suriname, fully curtailed since November 2015. The Government of
the Republic of Suriname and Alcoa continue to develop definitive
agreements concerning Suralco’s remaining activities in the country
and the future of the bauxite industry in Suriname. Pending
completion of those agreements, Alcoa will continue to operate the
Afobaka hydroelectric facility, which supplied power to the Suralco
operations.
“We are working in partnership with the Government of the
Republic of Suriname to reach the best possible solution that would
enable Suriname to maintain its bauxite industry. Dialogue is
ongoing and progress is being made,” said Roy Harvey, Chief
Executive Officer of Alcoa. “As we enter 2017, we also continue to
streamline and strengthen our portfolio to better focus on our
businesses and the growth opportunities ahead.”
As a result of the permanent closure of the mines and refinery,
Alcoa will record in the 2016 fourth quarter:
- $90 million in restructuring-related
charges, after-tax and noncontrolling interest. Alcoa’s share of
total cash costs associated with the closure, inclusive of prior
accruals, are estimated to be $151 million over five years, with
$24 million to be spent in 2017.
Additionally in the 2016 fourth quarter, Alcoa has announced
that it will record a:
- $31 million non-cash charge, after-tax
and noncontrolling interest, to impair Alcoa of Australia Limited’s
(AofA) interests in a Western Australia gas field. AofA determined
that the completed exploration activities do not support the
current carrying value.
The combined impact of the charges described above is estimated
to be $0.66 per share.
Alcoa also today announced that the December 1, 2016 power
outage at the Portland Aluminum smelter in Victoria, Australia is
not expected to have a significant unfavorable impact on fourth
quarter results. The smelter is an unincorporated joint venture
between AofA (55 percent), CITIC (22.5 percent), and Marubeni
Aluminium Australia (22.5 percent).
AofA and Suralco are part of the Alcoa World Alumina and
Chemicals (AWAC) group of companies owned 60 percent by Alcoa and
40 percent by Alumina Limited. The AWAC partnership agreements
between Alcoa and Alumina Limited provide for the allocation of
certain liabilities occurring prior to AWAC’s formation on January
1, 1995 according to a party’s preformation ownership interest.
While Alcoa and Alumina Limited are currently in the process of
allocating AWAC’s Suralco-related costs and liabilities in
accordance with those provisions, the recorded charges represent
Alcoa’s view of the liabilities at the present time.
On November 1, Alcoa Corporation announced it had completed the
separation from its parent company Alcoa Inc. (now named Arconic
Inc.) and began operating as an independent, publicly-traded
company.
About Alcoa Corporation
Alcoa (NYSE: AA) is a global industry leader in bauxite, alumina
and aluminum products, with a strong portfolio of value-added cast
and rolled products and substantial energy assets. Alcoa is built
on a foundation of strong values and operating excellence dating
back nearly 130 years to the world-changing discovery that made
aluminum an affordable and vital part of modern life. Since
inventing 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. Visit us online on
www.alcoa.com, follow @Alcoa on Twitter and on Facebook at
www.facebook.com/Alcoa.
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company developments and financial performance through its website
at www.alcoa.com.
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reflected in any forward-looking statements are based on reasonable
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due to a variety of risks and uncertainties. Additional information
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version on businesswire.com: http://www.businesswire.com/news/home/20170103006322/en/
Alcoa CorporationInvestor Contact:James Dwyer,
212-518-5450James.Dwyer@alcoa.comorMedia Contacts:Monica Orbe,
212-518-5455Monica.Orbe@alcoa.com
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