Herald and Weekly Times
The heat is on Alcoa smelter
Edited by : AL CIRCLE
2 min read
A RUTHLESS review of its global smelting operations will place Alcoa's ageing Point Henry smelter near Geelong in the gun for closure -- threatening the state's biggest export industry.
Analysts singled out the almost 50-year-old Point Henry plant as the most vulnerable local asset as the company looks to slash 12 per cent from its worldwide aluminium production.
The shock of a steep drop in aluminium prices over the past year has prompted the US manufacturing giant to launch a sweeping review into the profitability of its 20 global smelters.
Aluminium is Victoria's biggest export industry worth $1.6 billion a year.
The Victorian Government and the union covering Alcoa's 1500 workers in Victoria were told by management yesterday any decision on the plant's future would be made in New York.
Alcoa has been pounded by an 18 per cent drop in aluminium prices and strong Australian dollar in the past 12 months.
The first casualty was the company's giant plant in Tennessee, US, which will close after being mothballed in 2009, while another plant in Texas was partially shut.
Alcoa chairman Klaus Kleinfeld said the moves would improve its costs and competitiveness, with extra closures to be revealed "in the near future".
Alcoa partner Alumina lost 3 per cent on Wall Street trading after the announcement, before its final quarter results next week.
Analysts said the Portland smelter, 55 per cent owned by Alcoa, looks assured due to a power supply agreement signed last year with Loy Yang Power.
But they are less certain about the Point Henry smelter and rolled products plant, which date from 1963.
While Portland sits in the middle tier for cost efficiency among Alcoa's 20 smelters, Port Henry languishes in the bottom four, struggling against nations with cheap labour and low-value currencies.
Credit Suisse analyst Matthew Hope said Portland was more modern than Point Henry, which still relies on brown coal power from Alcoa's Anglesea powerplant.
"Point Henry is ... the least economical of the company's Australian assets," Mr Hope said.
Analysts singled out the almost 50-year-old Point Henry plant as the most vulnerable local asset as the company looks to slash 12 per cent from its worldwide aluminium production.
The shock of a steep drop in aluminium prices over the past year has prompted the US manufacturing giant to launch a sweeping review into the profitability of its 20 global smelters.
Aluminium is Victoria's biggest export industry worth $1.6 billion a year.
The Victorian Government and the union covering Alcoa's 1500 workers in Victoria were told by management yesterday any decision on the plant's future would be made in New York.
Alcoa has been pounded by an 18 per cent drop in aluminium prices and strong Australian dollar in the past 12 months.
The first casualty was the company's giant plant in Tennessee, US, which will close after being mothballed in 2009, while another plant in Texas was partially shut.
Alcoa chairman Klaus Kleinfeld said the moves would improve its costs and competitiveness, with extra closures to be revealed "in the near future".
Alcoa partner Alumina lost 3 per cent on Wall Street trading after the announcement, before its final quarter results next week.
Analysts said the Portland smelter, 55 per cent owned by Alcoa, looks assured due to a power supply agreement signed last year with Loy Yang Power.
But they are less certain about the Point Henry smelter and rolled products plant, which date from 1963.
While Portland sits in the middle tier for cost efficiency among Alcoa's 20 smelters, Port Henry languishes in the bottom four, struggling against nations with cheap labour and low-value currencies.
Credit Suisse analyst Matthew Hope said Portland was more modern than Point Henry, which still relies on brown coal power from Alcoa's Anglesea powerplant.
"Point Henry is ... the least economical of the company's Australian assets," Mr Hope said.
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