Analyst says Alcoa will probably keep WA refineries open

Alcoa will
probably not shut any of its WA factories, according to an analyst, following
the company’s announcement of a global review and capacity decrease.

The ABC reports that Peter Strachan of Stock Analysis said the three alumina refineries
in WA – the state where 4,000 of Alcoa’s 5,000 Australian employees reside
would likely stay open.

He said
efficiencies would probably be sought, though, and there might be a reduction
in head count among the Kwinana, Pinjarra and Wagerup sites.

“One
of the factors impacting on Australia is the high cost of doing business here,
rising costs for natural gas in the Perth basin and also high labour costs in
Australia compared with some of their other operations,” Strachan told the
ABC.

“With
any sort of efficiencies it’s likely they’ll be seeking to reduce the number of
people they’re using and whether that’s through automation or combining jobs or
just a review of the processes they have.”

He said the company
would be “doing its sums” over the 12-month review period, announced on Friday in New York.

Alcoa aims to reduce global smelting capacity by 14 per cent and refining capacity by 16 per cent.

There has
been concern around the Kwinana refinery in particular, which is the oldest of
the three sites, built in 1963, and reportedly the least profitable.

The
Australian Workers Union was hopeful that Alcoa wouldn’t make any major cuts in
the state, and that previous productivity improvements would be enough to keep
Kwinana from being shut.

“There’s probably some other high-cost operations
that the company has around the globe that would be looked at before Kwinana,” AWU branch secretary Stephen Price told AAP.

Strachan
said a new five-year, 82-petajoule supply contract – announced yesterday,
contributing 18 per cent of the company’s gas needs and beginning in 2018 – was
proof that Alcoa planned to stay put in the state.

The natural
gas will be supplied by Santos and sourced from the Carnavon Basin’s John
Brookes field.

Image: http://www.alcoa.com