Smelting capacity to supply Warrick’s rolling mill
Alcoa Corporation (NYSE:AA) today announced plans to restart three of
five potlines at its Warrick Operations aluminum smelter near
Evansville, Ind., an action that will further improve the
competitiveness of the on-site rolling mill.
The process to restart the three lines, with 161,400 metric tons of
annual capacity, will begin immediately and is expected to be complete
in the second quarter of 2018. The three potlines will directly supply
the Warrick rolling mill, which serves the North American market with
flat-rolled aluminum for the food and beverage can packaging industry.
The smelter’s molten metal will supplement purchased scrap metal and
other raw materials that the Warrick site will continue to procure.
“By restarting a portion of the Warrick smelter, we will provide an
efficient source of metal for the co-located rolling mill and help it
meet an anticipated increase in production volumes,” said Tim Reyes,
President of Alcoa’s Aluminum business unit. “The action will enable us
to more fully utilize the assets at this integrated site for the benefit
of our investors, customers, employees and the community.”
The smelter at Warrick closed in March of 2016. Two of the five smelting
potlines will be classified as curtailed capacity and will remain idle.
After this partial restart, Alcoa will have approximately 886,000 metric
tons idled of its total smelting capacity of 3.4 million metric tons.
Restart expenses expected to be incurred in the third and fourth
quarters of 2017 are estimated to be between $30 and $35 million
(after-tax), or $0.16 and $0.19 per share, on a combined basis.
Additionally, in third quarter 2017, Alcoa will record an after-tax
benefit of approximately $25 million, or $0.13 per share, for the
reversal of liabilities related to the original closure.
The Warrick location currently employs about 1,250. The restart will
increase the site’s employment by approximately 275, including those who
will be hired or recalled from layoff status. Some existing employees
will transfer to the smelter.
The federal, state and local governments have all been supportive of the
restart plan. Alcoa appreciates the actions the Trump Administration has
taken to address the challenges faced by the U.S. aluminum industry,
including Chinese overcapacity. As Warrick Operations restarts aluminum
production, Alcoa is confident the Administration will continue to be
attentive to the industry’s needs.
The state of Indiana, through the Indiana Economic Development Corp.
(IEDC), and Warrick County offered preliminary assistance to support the
restart plan. The IEDC offered Alcoa up to $2.4 million in conditional
tax credits and up to $100,000 in training grants based on plans to add
new full-time jobs for Indiana residents.
"With its decision to restart operations in Indiana, Alcoa is showcasing
the value that this facility and Indiana's manufacturing expertise
provide to its global operations," said Indiana Governor Eric J.
Holcomb. "In Indiana, we're witnessing incredible momentum as
manufacturers continue to choose Indiana for growth, and we're pleased
that Alcoa once again chose Indiana."
Alcoa Warrick Operations is comprised of the smelter and the rolling
operations, which includes state-of-the-art casting, hot and cold
rolling, slitting and coating capabilities. The operations also include
the power supply for the smelter and rolling operations, consisting of a
coal mine that fuels four generating units with a combined net capacity
of about 750 megawatts. Three of those units are wholly-owned by Alcoa
Power Generating Inc. A fourth unit, Warrick Unit 4, with 300 megawatts
of net capacity, is owned in a 50-50 partnership with Vectren, a utility
headquartered in Evansville.
As part of the smelter restart plan, Alcoa Power Generating Inc. and
Vectren have agreed to jointly own and operate Unit 4 through December
31, 2023. Vectren’s support in the restart decision provides important
clarity for the power portfolio at Warrick.
Carl Chapman, Vectren Chairman, President and CEO said: “Restarting the
operations of the smelter is a significant economic development win, and
we were pleased to play an important role in helping make this a
reality.”
Ed Hemmersbach, Vice President of Operations for Alcoa Aluminum said:
“We appreciate the assistance and collaboration with numerous
stakeholders in this process, including our employees, United
Steelworkers Local 104, Vectren, and the local and state officials who
have all provided support in our work to strengthen the integrated
operation here in Southwestern Indiana.”
About Alcoa
Alcoa (NYSE: AA) is a global industry leader in bauxite, alumina and
aluminum products, built on a foundation of strong values and operating
excellence dating back nearly 130 years to the world-changing discovery
that made aluminum an affordable and vital part of modern life. Since
inventing the aluminum industry, and throughout our history, our
talented Alcoans have followed on with breakthrough innovations and best
practices that have led to efficiency, safety, sustainability and
stronger communities wherever we operate. Visit us online on www.alcoa.com,
follow @Alcoa on Twitter and on Facebook at www.facebook.com/Alcoa.
About Warrick Operations
Alcoa Warrick Operations produces aluminum sheet for beverage and food
can ends, tabs, and other flat-rolled aluminum products, including
lithographic sheet. The facility is the world’s largest producer of
coated container sheet and the only North American supplier of
high-quality lithographic sheet. It also includes four coal-fired
generating units with a combined net generating capacity of about 750
megawatts, including one unit co-owned with Vectren, a utility company
headquartered in Evansville, Indiana.
Dissemination of Company Information
Alcoa Corporation intends to make future announcements regarding company
developments and financial performance through its website at www.alcoa.com.
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