Alcoa to pare down remaining Suralco Refining capacity

Lightweight metals leader Alcoa announced the curtailment of Suralco’s remaining 887,000 metric tons per year of alumina refining capacity as discussions continue with the Government of Suriname on preserving the country’s bauxite and refining industry. The refinery is scheduled to be idled by November 30, 2015. The curtailment and ongoing discussions are aligned with Alcoa’s strategy to create a globally competitive commodity business.

Discussions between Alcoa and the Government of Suriname began in October 2014 to reach a joint solution for Suralco that has faced expiring bauxite reserves and lacks a long-term energy solution.

“Suralco’s ongoing energy challenges and limited bauxite supply, combined with unfavorable market conditions, mean it is no longer possible to continue operations,” said Bob Wilt, President Alcoa Global Primary Products. “Our immediate attention now turns to the employees of Suralco who have worked hard during these challenging times. We understand how difficult this decision is for employees and we will work closely with them and our unions, government and community stakeholders during the transition.”

Total restructuring related charges in the second half of 2015 associated with the curtailment are expected to be between $65 million and $75 million after-tax and non-controlling interest, or $0.05 to $0.06 per share, of which approximately 50 percent would be recorded in the third quarter. Approximately 80 percent of the charges are non-cash.

The curtailment follows Alcoa’s March 2015 announcement to evaluate 2.8 million metric tons of refining capacity for possible curtailment or divestiture. Alcoa’s review of its refining operations is consistent with the Company’s 2016 goal of lowering its position on the world alumina cost curve to the 21st percentile.

Suralco is part of the Alcoa World Alumina and Chemicals group of companies owned 60 percent by Alcoa Inc., and 40 percent by Alumina Limited.