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Researched by Industrial Info Resources (Sugar Land, Texas)--Aluminum giant Alcoa (NYSE:AA) (New York, New York) announced Monday that it will split into two stand-alone companies. The move will allow for a cost-competitive metals mining and production company to take advantage of growing global demand for aluminum, and for an innovation- and technology-driven company to meet the needs of the jet engine, automotive and construction industries, according to Chief Executive Officer Klaus Kleinfeld. Industrial Info is tracking 43 active Alcoa projects worth $7.13 billion.
This includes 10 projects, worth roughly $6.5 billion, that are in the planning stages, where plenty of factors could where plenty of factors could alter their outcome and timing; and 33 projects, worth more than $600 million, that are in the construction and engineering phases.
Kleinfeld said during a conference call that Alcoa has been growing its two "value engines"--upstream mining and production, and value-added products and solutions--for a number of years, "and now we believe they are ready to have a separate life and go their own way." The transaction is expected to be completed in the second half of 2016.
The creation of a stand-alone upstream company for bauxite, alumina and aluminum production comes at a time when there is a global glut of aluminum. The company noted it has closed, divested or curtailed 1.4 million metric tonnes, or 33%, of its total smelting operation capacity since 2007. Earlier in September, the company announced the curtailment of the remaining 887,000 metric tonnes per year of the Suralco alumina-refining capacity in Suriname.
Among the projects being tracked by Industrial Info is a $2 billion investment in Greenland that Alcoa has been considering. The company was evaluating the feasibility of building a 340,000-ton-per-year aluminum smelter on Maniitsoq Island; however, in today's market, this project is not likely to move forward in the near term.
Strong Growth in Demand on Horizon
Global aluminum demand is expected to grow 6.5% in 2015 and double between 2010 and 2020, according to Alcoa. The upstream company will include 64 facilities worldwide and 17,000 employees. Upstream revenues for the 12 months through June 30, 2015, totaled $13.2 billion. The company will be the world's fourth-largest aluminum producer and have the world' largest alumina-refining system, according to Alcoa.
Meanwhile, the value-add company will continue to supply the aerospace industry, particularly in the field of jet engines and aerospace structures, Kleinfeld said. About 40% of the companies pro-forma revenues for the 12 months through June 30, 2015, came from the aerospace market, it said.
The value-add company also will benefit from growing automotive revenues, which are expected to increase 2.4 times from 2014 to $1.8 billion in 2018. Alcoa announced September 24 the completion of a $300 million expansion at its Alcoa, Tennessee, facility to supply sheet to the automotive industry.
The value-add company will operate in 157 locations globally and have about 43,000 employees. Pro-forma revenues for the company for the 12 months through June 30 2015 totaled $14.5 billion.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
This includes 10 projects, worth roughly $6.5 billion, that are in the planning stages, where plenty of factors could where plenty of factors could alter their outcome and timing; and 33 projects, worth more than $600 million, that are in the construction and engineering phases.
Kleinfeld said during a conference call that Alcoa has been growing its two "value engines"--upstream mining and production, and value-added products and solutions--for a number of years, "and now we believe they are ready to have a separate life and go their own way." The transaction is expected to be completed in the second half of 2016.
The creation of a stand-alone upstream company for bauxite, alumina and aluminum production comes at a time when there is a global glut of aluminum. The company noted it has closed, divested or curtailed 1.4 million metric tonnes, or 33%, of its total smelting operation capacity since 2007. Earlier in September, the company announced the curtailment of the remaining 887,000 metric tonnes per year of the Suralco alumina-refining capacity in Suriname.
Among the projects being tracked by Industrial Info is a $2 billion investment in Greenland that Alcoa has been considering. The company was evaluating the feasibility of building a 340,000-ton-per-year aluminum smelter on Maniitsoq Island; however, in today's market, this project is not likely to move forward in the near term.
Strong Growth in Demand on Horizon
Global aluminum demand is expected to grow 6.5% in 2015 and double between 2010 and 2020, according to Alcoa. The upstream company will include 64 facilities worldwide and 17,000 employees. Upstream revenues for the 12 months through June 30, 2015, totaled $13.2 billion. The company will be the world's fourth-largest aluminum producer and have the world' largest alumina-refining system, according to Alcoa.
Meanwhile, the value-add company will continue to supply the aerospace industry, particularly in the field of jet engines and aerospace structures, Kleinfeld said. About 40% of the companies pro-forma revenues for the 12 months through June 30, 2015, came from the aerospace market, it said.
The value-add company also will benefit from growing automotive revenues, which are expected to increase 2.4 times from 2014 to $1.8 billion in 2018. Alcoa announced September 24 the completion of a $300 million expansion at its Alcoa, Tennessee, facility to supply sheet to the automotive industry.
The value-add company will operate in 157 locations globally and have about 43,000 employees. Pro-forma revenues for the company for the 12 months through June 30 2015 totaled $14.5 billion.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
