Aluminium smelter and alumina refiner Alcoa has posted a net loss of $221 million for the third quarter of 2019.
As part of the results, Alcoa announced that it would review smelting and refining capacity and look into potential asset sales.
With a total revenue of $2.6 billion, the New York stock exchange listed company operates bauxite mines, alumina refineries and aluminium smelter in Australia. Three of the refineries operate in Western Australia, and its an aluminium smelter in Victoria at Portland.
The company’s announcement signalled a review that will reduce costs and search for longer-term profitability.
“Since our inception as a public company in 2016, we have relentlessly focused on strengthening our Company through portfolio and balance sheet actions,” said president and CEO Roy Harvey. “Just last month, we introduced a new operating model to create a leaner, more operator-centric organization, and today we are announcing a significant review of our portfolio that demonstrates a drive for continued improvement.”
The review will lead to non-core asset sales aiming to generated $500 million to $1 billion in net proceeds. Under scrutiny will be 1.5 million tonnes of smelting capacity and 4 million tonnes of alumina refining capacity. To reach the proceed targets, Alcoa will look into improvement, curtailments, closures, or divestitures.
As part of the review, Alcoa will seek to become the lowest emitter of carbon dioxide among all global aluminium companies, per ton of emissions in smelting and refining. Alcoa’s smelter in Victoria runs on electricity generated by brown coal generators in the Latrobe Valley. In the first half of 2019, the Portland smelter ran at a loss of $29 million.
Looking to its restructuring, Harvey outlined the priorities for the business.
“As we look to the future, two trends in the aluminium industry are apparent. First, the inherently eco-friendly qualities of aluminium will continue to drive global demand growth. Second, our ability to produce responsibly-sourced aluminium will be valued by customers and the marketplace,” he said.