Alcoa (AA) to Close Portovesme Smelter; Sees Q3 Charges

Alcoa (NYSE: AA) announced that it intends to permanently close its Portovesme (Carbonia-Iglesias, Italy) primary aluminum smelter, which has been curtailed since November 2012. The closure will reduce Alcoa’s global smelting capacity by 150,000 metric tons to 3.6 million metric tons per year.

The Portovesme smelter was curtailed in 2012 because it was one of the highest cost smelters in the Alcoa system and had limited prospects for becoming competitive.

“The fundamental reasons that made the Portovesme smelter uncompetitive unfortunately have not changed,” said Bob Wilt, President, Alcoa Global Primary Products. “We will continue to meet the commitments made to our employees and our stakeholders, acting in good faith as we have always done.”

As committed to the government and unions, Alcoa has provided financial social support, along with outplacement and re-employment services for employees.

The closure is aligned with Alcoa’s strategy to create a globally competitive commodity business and lower its position on the world aluminum production cost curve to the 38th percentile by 2016.

Total restructuring-related charges for third quarter 2014 as a result of the closure are expected to be between $170 million and $180 million after-tax, or between $0.14 and $0.15 per share, of which approximately 60 percent is non-cash.

*** The Street is looking for overall Q3 EPS of $0.18.

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