ARNC Arconic Corporation

Alcoa said Tuesday it reached an agreement with the state of New York for an incentive package to increase the competitiveness of its Massena West smelter.

The company said the move will help secure hundreds of jobs, though the lightweight-metals manufacturer will continue other planned cuts. Alcoa had previously planned to curtail operations at the smelter amid a tough market.

The 3½ year agreement will improve the cost position of the smelter and support growth projects for the casthouse, the company said.

"Today's agreement helps better position the smelter in light of prevailing market conditions, providing this facility a bridge to a stronger commodity market and maintaining jobs in the North Country," Chief Executive Klaus Kleinfeld said.

The state's incentive package will help maintain about 600 jobs at the Massena West facility through the term of the agreement. The plant has 130,000 metric tons of smelting capacity.

The New York Power Authority will provide low-cost hydro power, but this lower power rate will be increased as the price of aluminum increases in the global metals exchange market, according to a statement from Gov. Andrew Cuomo's office. Empire State Development, the state's economic development agency, will provide $38.8 million over the 3½ years for capital and operating expense support.

Alcoa is required to maintain at least 600 full-time employees. It could be hit with up to $40 million in penalties for breaching or terminating the agreement.

Mr. Kleinfeld said Sen. Chuck Schumer and Gov. Cuomo have been "tremendous allies" for Alcoa's Massena operations for years.

Still, Alcoa said it will continue with its other previously announced curtailments of uncompetitive smelting and refining capacity, as the Midwest transaction aluminum price is down 30% year-to-date.

The reductions, totaling 373,000 metric tons, will improve the cost position of the Upstream business, which involves all aspects of its aluminum production, and ensure competitiveness in a lower pricing environment, the company said.

Alcoa has been aggressively reshaping its Upstream portfolio as part of a multiyear strategy to position itself in low-cost aluminum production.

Revised total restructuring-related charges in the fourth quarter will be between $130 million and $150 million after-tax, or 10 to 11 cents a share.

On Monday, hedge fund Elliott Management Corp. disclosed it has accumulated a 6.4% stake in Alcoa Inc. after the company's decision in September to split in two, spinning off its more diverse parts-making business from its raw-aluminum operations. Elliott's analysis that Alcoa is the most undervalued of U.S. metals and mining companies prompted the investment, according to people with familiar with the matter.

Write to Anne Steele at Anne.Steele@wsj.com

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(END) Dow Jones Newswires

November 24, 2015 14:35 ET (19:35 GMT)

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