Alcoa Inc (NYSE:AA) to Cut Down its Brazil Smelter Capacity

by James Karedelli | Monday, Mar 31, 2014 | 962 views

Boston, MA, 03/31/2014  (usastockreports)- Alcoa Inc (NYSE:AA) had announced that two of its smelters in Brazil will cut down its smelting capacity by 147,000 metric tons. The reason cited for closing is the falling prices of the aluminum in global market conditions and Swelling costs which have rendered this smelter ineffective. By the end of May 2014 the curtailment are scheduled to be complete.

Cost Cutting is the Aim

Bob Wilt, President of Alcoa Inc (NYSE:AA) Global Primary Products said throughout the globe they are taking initiative to cut down capacity of smelters who induces high cost. It will reshape their cost mechanism. He said that these decisions are difficult to take but necessary to reduce cost. Owing to this curtailment the refineries at Posco and São Luís will reduce its production capacity. Other operation of the Brazil Alcoa will be nit affected by this.

Difficult Decision to Take

Aquilino Paolucci, The President of Alcoa Latin America and the Caribbean, said they know the impact of this decision on employees, contractors and communities. He thanked all the people associated with it and hoped that the company will actively work with its employees, Trade unions, and stakeholders so the transition would pass with much impacting the company. The company has 5,700 employees and six production factories and offices across the Brazil.

Earlier in 2013 the company has closed 190000 tons US, Italy and Canada smelters unit. Once the entire announcement regarding curtailments and shut down is complete the company will have 21% or 800,000 of its capacity will be offline.

Future Scenario

Alcoa Inc (NYSE:AA) is trying hard to match with changing world and trying to maintain the profit. If the preventive actions are not taken at the right time the company has to pay in the longer run. So even if decision that are not pleasant the company is taking keeping an eye on the future.

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