Alcoa performs well in the alumina sector in Q3

Alcoa has signed a letter of intent in the second quarter in a bid to sell its ownership stake in Alcoa Minerals of Jamaica L.L.C. the operational company for Jamalco bauxite mine and alumina refinery. The company has also signed a Memorandum of Understanding with the Government of Suriname so that they can focus on the Suralco operations of the company.

The third quarter was also a good spell for the Sausi Arabian Ma’aden-Alcoa joint venture which is now fully operational and profit generating. The refinery, which is 98 percent complete is supposed to be world’s lowest cost refinery. The bauxite mine is also 73 percent complete. The introduction of a low-cost refinery and closing of the high cost smelters is the company’s strategy of lowering its position the global cost curve to 38th percentile in case of aluminium and 21st percentile in cast of alumina cost curve by 2016.

In the third quarter, the alumina segment’s After Tax Operating Income (ATOI) was $62 million which is $24 million more than the last quarter but $5 million less than the same quarter last year. This sequential rise in ATOI can be attributed to the increased productivity, rising LME pricing, favorable foreign exchange rates and higher volume of production.

Results were partially offset by lower Alumina Price Index-based pricing and higher energy costs in Australia. Adjusted EBITDA per metric ton increased $7 from second quarter 2014 to $46 per metric ton in third quarter 2014.