Alcoa Inc. (AA:US), the largest U.S. aluminum producer, will curtail capacity at two smelters in Brazil after falling metal prices and rising costs made them uncompetitive.
Alcoa will temporarily shutter 147,000 metric tons at plants in Sao Luis and Pocos de Caldas, the New York-based company said today in a statement. The action will leave the Pocos smelter fully idled. Sao Luis is 40 percent-owned by BHP Billiton Ltd.
The company said it will take a charge of as much as 5 cents a share on the move in the first quarter.
Alcoa is reviewing its smelters with the highest operating costs. It said today that overall it plans to halt 800,000 tons, or 21 percent, of its capacity.
Alcoa said earlier this year it will close a 50-year-old smelter in Point Henry, Australia, cutting 190,000 tons of capacity. In 2013, it permanently closed 190,000 tons at smelters in the U.S., Canada and Italy.
Alcoa is also building the world’s lowest-cost aluminum smelter in Saudi Arabia in partnership with the country’s state-owned mining company.
The price of aluminum has fallen 8 percent in the last 12 months amid a global surplus.
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