Alcoa to Cut Smelting Capacity in Brazil

Alcoa on Friday said it would cut 147,000 metric tons of its smelting capacity in Brazil, citing "challenging" conditions in the market and cost increases.

The move comes as the aluminum industry at large cuts production as prices fall. Earlier Friday, United Co. Rusal PLC, the world's biggest aluminum producer, halted plans for a smelter in Siberia.

Alcoa, likewise, said earlier this year that it would close several Australian plants.

Regarding its Brazil operations, Alcoa said Friday that the remaining 62,000 metric tons of capacity at the company's smelter in Pocos will be curtailed, resulting in a production decrease at the location's refinery. Last year, Alcoa cut 34,000 metric tons of capacity at the Pocos smelter.

Alcoa said it expects to curtail 85,000 metric tons of capacity at its Sao Luis smelter, a year after it cut 97,000 metric tons there. The Sao Luis refinery won't be affected, nor will other locations in Brazil, Alcoa said.

Alcoa said it expects to finish the Brazil curtailments by the end of May.

The company put 460,000 metric tons of smelting capacity under review in May. With Friday's moves, Alcoa will have reduced capacity by 21%, or 800,000 metric tons.

Alcoa said it expects to record charges related to the Brazil changes of between $40 million to $50 million, or four cents to five cents a share, during the first quarter.

Write to Michael Calia at [e-mail]

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