Bloomberg News

Greenland Courting Alcoa to Build Smelter, Finance Minister Says

January 15, 2014

Greenland hopes to begin formal negotiations with Alcoa Inc. (AA:US), the largest U.S. aluminum producer, on building a smelter capable of producing 340,000 metric tons of the metal annually, the country’s finance minister said.

During a visit to Iceland, “we had some informal meetings with some representatives of Alcoa,” Finance Minister Vittus Qujaukitsoq said in an interview in Reykjavik. “Hopefully Alcoa will come to the government and continue the negotiations that we have anticipated for a long time.”

Alcoa has been exploring the option to built a facility in Greenland since 2007, when the New York-based company announced it had agreed to conduct a feasibility study with the self-rule government of the island. The original plans anticipated the building of a hydropower plant to supply the smelter with energy and that production could start as early as this year, Alcoa and Greenland said then.

Aluminum prices haven’t recovered to levels seen before the financial crisis as global supply has outstripped demand for nine years amid surging production in China and the Middle East. In response, Alcoa has been closing high-cost smelters and refocusing investment in divisions that roll and form the metal into high-tech components used in cars and commercial aircraft.

“The Greenland government has interest in making the Alcoa project successful, a pioneering project for Greenland,” said Qujaukitsoq. “It would be good for our economy and our society if a smelter was built.” As many as 650 people would be employed by the factory once fully operational, he said.

Alcoa reported a fourth-quarter net loss of $2.34 billion, compared with net income of $242 million a year earlier, in a Jan. 9 statement. Global aluminum demand will increase by 7 percent this year, Alcoa said in the statement. That forecast matches the company’s estimate of demand growth in 2013.

To contact the reporter on this story: Omar R. Valdimarsson in Reykjavik at valdimarsson@bloomberg.net

To contact the editor responsible for this story: Jonas Bergman at jbergman@bloomberg.net


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Companies Mentioned

  • AA
    (Alcoa Inc)
    • $15.69 USD
    • 0.84
    • 5.35%
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