Global aluminium producer Alcoa has announced it will cut global capacity smelting by 12%, or approximately 531,000 metric tons.Alcoa is targeting the reductions to reduce excess supply in the market and boost margins, after aluminium prices slumped 27% from highs in 2011.
“The curtailments will contribute to the Company’s long-term goal of lowering Alcoa’s position on the world aluminium production cost curve by 10 percentage points,” the company said in a statement.
The Pittsburgh, PA company will shutter operations in Tennessee, along with two of six previously idled pot lines at its Texas plant.
Alcoa plans to announce further curtailments in the near future. The company currently has capacity to smelt 4.5 million metric tons of metal.
“These are difficult but necessary steps to improve Alcoa’s competitiveness, preserve and grow shareholder value and protect jobs in the rest of the Alcoa system,” said Alcoa Chairman and CEO Klaus Kleinfeld.
Restructuring charges are expected to reduce fourth quarter earnings by $0.15 to $0.16 per share, amounting to $155 to $165 million.