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Researched by Industrial Info Resources (Sugar Land, Texas)--Producers of chemical compound alumina, or aluminum oxide, in the U.S. have suffered from declining prices and an unfavorable marketplace as demand from the aluminum industry remains depressed. These producers are being cautious about future investments. Industrial Info currently is tracking just $30 million in planned active capital and maintenance spending in the U.S. over the next couple of years. An additional $164 million in previously planned projects are being monitored as "on-hold," with little prospect of becoming active in the near future.
Many of the major alumina producers in the U.S. have taken drastic measures to maintain profitability, while some have had to resort to declaring bankruptcy, shift product focus or temporarily idle manufacturing plants.
Alcoa (NYSE:AA) (New York, New York) has announced it will idle its Point Comfort, Texas alumina manufacturing plant in the second quarter of 2016. Alcoa was well into construction of a $25 million mud handling unit addition. The completion of the project has been put on hold as well as the $45 million second phase of the project, where installation of new filter presses and controls would be added. In the meantime, Alcoa will be mothballing the plant in June and will then evaluate the market to determine whether to restart or permanently close at a later date.
Noranda Aluminum Holding Corporation (OTC:NORNQ) (Franklin, Tennessee) is the most recent company to file for Chapter 11 bankruptcy protection. While the firm continues with the reorganization bankruptcy proceedings, it placed on hold five capital projects with a total investment value (TIV) of approximately $48 million. At this point, the capital spending has been temporarily suspended, however there is hope that it will eventually install a new $25 million calciner. In the meantime, plant production is shifting from smelter-grade to chemical (or non-metallurgical)-grade alumina to concentrate on a more profitable product.
Sherwin Alumina (Gregory, Texas) also filed for Chapter 11 bankruptcy protection, adding to the company's frustration in its ongoing negotiations with labor union workers. International law firm Kirkland and Ellis LLP (Chicago, Illinois) reported that the price per metric ton of alumina had fallen from about $350 per ton in October 2014, when a lockout began, to $236 in November 2015, according to a letter the company wrote to United Steelworkers that month, saying the current price was "well below our cost of production." The law firm also stated that Sherwin Alumina is "locked in disadvantageous contracts" with steam and electricity provider Gregory Power Partners LP (Gregory) and bauxite provider Noranda Bauxite Limited (St. Ann, Jamaica). Bauxite is a raw material for alumina. Much like Noranda, Sherwin Alumina has temporarily put $45 million in capital projects on hold at its plant in Gregory. When the market begins to improve, the company will consider resuming the planned construction of the loading system and the transfer system.
Sasol Limited's (NYSE: SSL) (Johannesburg, South Africa) North American unit, which owns a Tucson, Arizona alumina powder plant, is looking elsewhere besides alumina to be profitable. In order to diversify its product offering, Sasol is mulling rebuilding and restarting a hydrochloric acid unit that was closed in 2014. This project is expected to begin construction in 2019 and has a 2021 completion date.
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. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
Many of the major alumina producers in the U.S. have taken drastic measures to maintain profitability, while some have had to resort to declaring bankruptcy, shift product focus or temporarily idle manufacturing plants.
Alcoa (NYSE:AA) (New York, New York) has announced it will idle its Point Comfort, Texas alumina manufacturing plant in the second quarter of 2016. Alcoa was well into construction of a $25 million mud handling unit addition. The completion of the project has been put on hold as well as the $45 million second phase of the project, where installation of new filter presses and controls would be added. In the meantime, Alcoa will be mothballing the plant in June and will then evaluate the market to determine whether to restart or permanently close at a later date.
Noranda Aluminum Holding Corporation (OTC:NORNQ) (Franklin, Tennessee) is the most recent company to file for Chapter 11 bankruptcy protection. While the firm continues with the reorganization bankruptcy proceedings, it placed on hold five capital projects with a total investment value (TIV) of approximately $48 million. At this point, the capital spending has been temporarily suspended, however there is hope that it will eventually install a new $25 million calciner. In the meantime, plant production is shifting from smelter-grade to chemical (or non-metallurgical)-grade alumina to concentrate on a more profitable product.
Sherwin Alumina (Gregory, Texas) also filed for Chapter 11 bankruptcy protection, adding to the company's frustration in its ongoing negotiations with labor union workers. International law firm Kirkland and Ellis LLP (Chicago, Illinois) reported that the price per metric ton of alumina had fallen from about $350 per ton in October 2014, when a lockout began, to $236 in November 2015, according to a letter the company wrote to United Steelworkers that month, saying the current price was "well below our cost of production." The law firm also stated that Sherwin Alumina is "locked in disadvantageous contracts" with steam and electricity provider Gregory Power Partners LP (Gregory) and bauxite provider Noranda Bauxite Limited (St. Ann, Jamaica). Bauxite is a raw material for alumina. Much like Noranda, Sherwin Alumina has temporarily put $45 million in capital projects on hold at its plant in Gregory. When the market begins to improve, the company will consider resuming the planned construction of the loading system and the transfer system.
Sasol Limited's (NYSE: SSL) (Johannesburg, South Africa) North American unit, which owns a Tucson, Arizona alumina powder plant, is looking elsewhere besides alumina to be profitable. In order to diversify its product offering, Sasol is mulling rebuilding and restarting a hydrochloric acid unit that was closed in 2014. This project is expected to begin construction in 2019 and has a 2021 completion date.
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. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
