Alcoa to Curtail Smelting And Refining Capacity

Lightweight metals leader Alcoa (NYSE: AA) today announced that it is takingdecisive action to curtail uncompetitive smelting and refining capacity toensure continued competitiveness amid prevailing market conditions. TheCompany will reduce aluminum smelting capacity by 503,000 metric tons andalumina refining capacity by 1.2 million metric tons. Alcoa will begin thecurtailments in the fourth quarter of 2015 and will complete them by the endof the first quarter of 2016. The reductions will further improve the cost position of the Upstreambusiness and ensure competitiveness in a lower pricing environment,including a 30 percent drop in the Midwest transaction aluminum priceyear-to-date. Alcoa has been aggressively reshaping its Upstream portfolioas part of a successful multi-year strategy to position itself as a low-costglobal leader in alumina and aluminum production. Once today's actions arecomplete, Alcoa will have closed, divested or curtailed 45 percent of totalsmelting operating capacity since 2007. "Alcoa has consistently taken decisive actions to create a commoditybusiness that is positioned to succeed throughout the cycle," said KlausKleinfeld, Chairman and Chief Executive Officer. "We have closed orcurtailed unprofitable capacity, repowered key assets at lower energyprices, built-up a profitable value-add casthouse network, established thefoundation for a strong commercial bauxite business, and made substantialproductivity improvements. In the face of continued adverse market forces,we are once again not standing still. These difficult, but necessarymeasures will further strengthen our Upstream portfolio, reducing our costposition and driving greater resilience as we prepare to launch thisbusiness as a strong standalone company in the second half of 2016." In its aluminum business, Alcoa will idle the Intalco and Wenatchee primaryaluminum smelters in Washington State, and the Massena West smelter in NewYork. The Company will not modernize the New York Massena East smelter andwill permanently close the facility; potlines at Massena East have beenclosed since March 2014. The casthouses at Intalco and Massena West, whichproduce value-add shaped products, will continue to operate. The AlcoaForgings and Extrusions facility in Massena is unaffected. In its alumina business, Alcoa will partially curtail refining capacity atits Pt. Comfort, Texas facility by about 1.2 million metric tons. "Across the globe, we have been taking measures to curtail smelting andrefining capacity that is not competitive to improve our cost profile," saidRoy Harvey, Executive Vice President and President, Global Primary Products."Alcoa has a long, proud history at the affected locations and our dedicatedemployees have worked hard to keep our facilities competitive in the face ofchallenging market conditions. Unfortunately, today's pricing environmentnecessitates very difficult decisions. We recognize how deeply thesedecisions affect our Alcoa family and communities and are committed toworking closely with our employees and unions and local stakeholders tosupport them through this transition." Once these actions are implemented, Alcoa will have curtailed or closed673,000 metric tons of uncompetitive smelting capacity and 2.5 millionmetric tons of uncompetitive refining capacity since its announced review of500,000 metric tons of smelting capacity and 2.8 million metric tons ofrefining capacity in March 2015. Total restructuring-related charges in the fourth quarter of 2015 associatedwith today's announcement are expected to be between $160 million and $180million after-tax, or $0.12 to $0.14 per share, of which approximately 30percent would be non-cash. As previously announced, Alcoa will separate into two, industry-leadingpublicly-traded companies in the second half of 2016 -- an Upstream-focusedcompany including its Mining, Refining, Smelting, Energy and Castingbusinesses, and a Value-Add company including its Global Rolled Products,Engineered Products and Solutions, and Transportation and ConstructionSolutions businesses.