Alcoa Corporation has scheduled a series of meetings with primary stakeholders to address concerns regarding the San Ciprián complex, which comprises an alumina refinery and an aluminium smelter. This week, representatives of their Spanish operating subsidiaries will be meeting with representatives of the national and regional authorities in Spain to discuss the financial losses incurred by the complex.
It is worth noting that the San Ciprián smelter was curtailed in January 2022 in accordance with the agreement reached with the workers' representatives in December 2021.
In February 2023, Alcoa agreed to a phased restart of the aluminium smelter starting in January 2024 through an amended Viability Agreement. Meanwhile, the refinery has been operating at 50 per cent of its capacity since the third quarter of 2022 to mitigate losses. Despite these efforts, the economic conditions for both the smelter and the refinery have continued to pose challenges. Therefore, Alcoa and its stakeholders are coming together to explore potential solutions and identify ways to ensure the long-term viability of the San Ciprián complex.
It is worth noting that since the smelter's reduction in output, the cost of energy in the long term has remained uncompetitive. Furthermore, the development and permitting of alternative energy sources, which were expected to be supported by Alcoa's power purchase agreements, have been delayed. Additionally, the company has faced market challenges, including the impact of the economic slowdown in Europe and declining sales prices. Despite these challenges, the company has continued to meet its obligations under the Viability Agreement, investing $65 million in 2023.
The CEO of Alcoa and President, William Oplinger, asserted: "We've been working to abide by all of the commitments contained in the Viability Agreement, including making capital investments, but the current situation remains severely challenged."
"We are resolved to continue conversations with the government and workers' representatives in a collaborative manner as we look to a long-term solution," Oplinger added.
Alcoa had enough funding to fulfil its obligations when the original and amended Viability Agreements were signed. However, due to current and foreseeable economic conditions, the business conditions at the San Ciprián operations are unsustainable. As a result, the Company is seeking solutions for the long term. Alcoa is asking the regional and national governments to work together and identify all potential forms of relief that could help reach a long-term solution.
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Alcoa, a multinational corporation listed on the New York Stock Exchange, is a renowned leader in the production of bauxite, alumina, and aluminium products, with a vision to revolutionize the aluminium industry to create a more sustainable future. Alcoa's values are based on integrity, operational excellence, care for people, and courageous leadership.
The company's mission is to leverage its expertise to convert raw potential into tangible progress. Alcoa has been pivotal in the development of the process that made aluminium an affordable and critical component of modern life. Over the years, their team of experts, "Alcoans," has introduced groundbreaking innovations and best practices, resulting in improved efficiency, safety, and sustainability. Moreover, Alcoa is committed to building stronger communities wherever they operate.
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