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Global aluminium giant Alcoa may further cut capacity this year as it reevaluates demand, the company’s Chief Executive Klaus Kleinfeld told analysts on its first quarter conference call.Already, the conglomerate has announced it would cut smelting capacity by 12 per cent, closing facilities in Tennessee and Texas in the U.S., as well as operations in Portovesme, Italy and La Coruña and Avilés, Spain.
“We continue to look at our portfolio, and we continue to monitor the outside world. And by the way, I mean, the 530,000 tons that we’ve taken off-line may not be the end,” Kleinfeld said.
Kleinfeld’s comments came after Alcoa reported a sharply stronger first quarter than the Street had anticipated. The company reported net income of $105 million when excluding one time items, or $0.10 per share, above expectations for a $0.04 loss. Revenue also surged, topping $6.0 billion.
Alcoa’s European lines are some of the highest-cost smelters in the company’s system, however systems in both Brazil and Australia also lie at the high point of its cost curve.
“There’s a discussion in Brazil, we just extended the time line which originally we had a deadline that finished by the 31st of March, we just extended it for 60 days,” Kleinfeld said. “With the government, there’s a discussion on the electric northern [ph] power, power cost supply. So we will continue to do that and we expect if we look at our portfolio on the refining side, that is a very strong commitment.”
The company has operations in São Luís and Poços de Caldas in Brazil, among others, which represent some of Alcoa’s oldest lines.
Alcoa did not specify how many jobs would be impacted if it did go ahead with further cuts.