(adds capacity after reduction for Sao Luis plant)
HOUSTON (ICIS)--Increased costs and challenging global market conditions are prompting Alcoa to reduce aluminium smelting capacity at two of its Brazil facilities by 147,000 tonnes, the company announced on Friday.
“Across the globe, we are taking measures to curtail high-cost smelting capacity that is not competitive and reshape our cost profile,” Alcoa Global Primary Products president Bob Wilt said in a news release.
The smelters, at Sao Luis and Pocos de Caldas, had become uncompetitive, Alcoa said. The reductions are expected to be complete by the end of May.
The move follows a 34,000 tonne reduction at Pocos and 97,000 tonnes reduction at Sao Luis in 2013. The current reduction will eliminate the remaining 62,000 tonnes of capacity at the Pocos smelter. The Sao Luis smelter capacity will be reduced by 85,000 tonnes to a capacity of 86,000 tonnes, Alcoa said.
Restructuring-related charges associated with the Brazil reductions are expected to be between $40m and $50m after taxes, of which about 30% would be non-cash, the company said.
About 800,000 tonnes, or 21%, of Alcoa's total smelting capacity will be offline once all reductions are complete, the company said.
Caustic soda is a key component of aluminium production.