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Researched by Industrial Info Resources (Sugar Land, Texas)--Alcoa's (NYSE:AA) (New York) curtailment of the remaining 74,000 tonnes of aluminum smelting capacity at its Sao Luis facility in Brazil later this month will be the latest in a series of actions aimed at cutting upstream production costs while enhancing its downstream, value-added businesses. The industry giant announced the curtailment March 30, saying the action is in line with its review of 500,000 tonnes of smelting capacity and 2.8 million tonnes of refining capacity for possible curtailment, closure or sale.
Industrial Info is tracking 37 active Alcoa projects worth $4.86 billion. The lion's share of the potential spend is $4 billion for eight projects that in the planning phases, where plenty of factors could alter their outcome and timing. Twenty-six projects, valued at $667 million, are in various stages of construction, while three projects, valued at $137 million, are in the engineering phases.
The company already had idled 85,000 tonnes of smelting capacity at Sao Luis in May 2014, and 12,000 tonnes in October. Alcoa said global market conditions and increased costs made the smelter uncompetitive. The company's aluminum refinery in Sao Luis would continue operations, it said.
Also, the company announced March 17 it would curtail 443,000 tonnes per year of refining capacity at its Suralco facility in Suriname. A Suriname government-owned entity agreed to pursue acquisition of the Suralco operations.
Alcoa's strategy has been to cut upstream aluminum production costs, thereby distancing itself somewhat from commodity metal price swings, while boosting its value-added product segments, such as its aerospace portfolio. The company said that with the latest curtailment, it would have about 749,000 tonnes, or 21% of its smelting capacity, offline.
Alcoa announced March 6 that during the next 12 months, it would review 14% of its global smelting capacity, and 16% of its refining capacity. As of the March 6 announcement, the company already had idled 19%, or 665,000 tonnes, of global smelting capacity, and 7%, or 1.2 million tonnes, of global refining capacity.
Meanwhile, Alcoa is putting more money into its downstream, value-added product segments, particularly for its aerospace business.
The company announced last month an agreement to acquire titanium and specialty metals products supplier RTI International Metals (NYSE:RTI) (Pittsburgh, Pennsylvania) in a stock-for-stock trade valued at $1.5 billion. Alcoa said RTI will allow it to capitalize on growth in the aerospace market. RTI will increase Alcoa's annual aerospace revenues 13% to $5.6 billion.
Also in March, Alcoa said it had completed the acquisition of privately held TITAL, a manufacturer of titanium and aluminum for aircraft engines and airframes. With TITAL, Alcoa said it has an eight-year production book.
Alcoa plans to present its first-quarter 2015 earnings results on Wednesday.
Alcoa has been considering a $2 billion investment in Greenland. 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.
Meanwhile, the expansion of the company's North Aluminum Sheet Plant in Alcoa, Tennessee, is well under way, with completion in mid-2015. The project, with a total investment value of $300 million, involves adding to the plant's rolling mill to meet growing demand for automotive aluminum. The U.S. Department of Energy recently announced it has conditionally approved a $259 million loan to Alcoa to expand the Tennessee plant.
For related information, see January 14, 2015, article - Alcoa Back in the Black for Full-Year 2014 as Prices Improve, Expects $750 Million Growth Capex in 2015.
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.
Industrial Info is tracking 37 active Alcoa projects worth $4.86 billion. The lion's share of the potential spend is $4 billion for eight projects that in the planning phases, where plenty of factors could alter their outcome and timing. Twenty-six projects, valued at $667 million, are in various stages of construction, while three projects, valued at $137 million, are in the engineering phases.
The company already had idled 85,000 tonnes of smelting capacity at Sao Luis in May 2014, and 12,000 tonnes in October. Alcoa said global market conditions and increased costs made the smelter uncompetitive. The company's aluminum refinery in Sao Luis would continue operations, it said.
Also, the company announced March 17 it would curtail 443,000 tonnes per year of refining capacity at its Suralco facility in Suriname. A Suriname government-owned entity agreed to pursue acquisition of the Suralco operations.
Alcoa's strategy has been to cut upstream aluminum production costs, thereby distancing itself somewhat from commodity metal price swings, while boosting its value-added product segments, such as its aerospace portfolio. The company said that with the latest curtailment, it would have about 749,000 tonnes, or 21% of its smelting capacity, offline.
Alcoa announced March 6 that during the next 12 months, it would review 14% of its global smelting capacity, and 16% of its refining capacity. As of the March 6 announcement, the company already had idled 19%, or 665,000 tonnes, of global smelting capacity, and 7%, or 1.2 million tonnes, of global refining capacity.
Meanwhile, Alcoa is putting more money into its downstream, value-added product segments, particularly for its aerospace business.
The company announced last month an agreement to acquire titanium and specialty metals products supplier RTI International Metals (NYSE:RTI) (Pittsburgh, Pennsylvania) in a stock-for-stock trade valued at $1.5 billion. Alcoa said RTI will allow it to capitalize on growth in the aerospace market. RTI will increase Alcoa's annual aerospace revenues 13% to $5.6 billion.
Also in March, Alcoa said it had completed the acquisition of privately held TITAL, a manufacturer of titanium and aluminum for aircraft engines and airframes. With TITAL, Alcoa said it has an eight-year production book.
Alcoa plans to present its first-quarter 2015 earnings results on Wednesday.
Alcoa has been considering a $2 billion investment in Greenland. 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.
Meanwhile, the expansion of the company's North Aluminum Sheet Plant in Alcoa, Tennessee, is well under way, with completion in mid-2015. The project, with a total investment value of $300 million, involves adding to the plant's rolling mill to meet growing demand for automotive aluminum. The U.S. Department of Energy recently announced it has conditionally approved a $259 million loan to Alcoa to expand the Tennessee plant.
For related information, see January 14, 2015, article - Alcoa Back in the Black for Full-Year 2014 as Prices Improve, Expects $750 Million Growth Capex in 2015.
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.
