Alumina production steady but returns slide

Alumina says production at its AWAC joint venture with Alcoa held steady through the second quarter, with its returns falling despite improved margins.

The ASX-listed Alumina (AWC) said AWAC production came in at 3.2 million tonnes, exactly in line with first quarter numbers. Its total dividends and capital returns from the joint venture fell, however, to $34.3 million, from $49.4m in the prior quarter.

The slide in returns was likely linked to the final instalment of a WA gas prepayment, Alcoa numbers suggest, given Alumina said the improvement in margins it had tipped upon the release of first quarter numbers in April had eventuated.

“Second quarter margins benefited from higher API prices and further productivity gains as well as the closure of higher cost capacity,” Alumina chief executive Peter Wasow said.

“A further $60 million of third party bauxite sales were completed during the quarter in line with the growing importance of the mining segment. These factors resulted in continuing strong cash distributions from the AWAC business.”

The firm added it had made no capital contributions to AWAC during the second quarter, with its net debt approximately $80 million at the end of June 2016. This compared favourably to a $110m net debt figure at the end of March.

Alumina owns 40 per cent of AWAC, which is at the centre of a dispute between the two parties over a planned Alcoa demerger.

Alumina has accused the larger US-based Alcoa of deliberately hiding how the JV will be treated in the demerger and is seeking clarity in court.