Alcoa still making metal in Italy before idling

Posted by tjdetai on December 25th, 2015

* Will idle smelters in late December * Italians working to resolve EC state aid dispute By Steve James NEW YORK, Nov 23 (Reuters) - Alcoa Inc , which said it will idle its two smelters in Italy in a dispute over state subsidies and power supplies, will keep producing aluminum at the plants for about a month, the company said on Monday. "We are still making metal there today and we anticipate that will continue until the latter part of December," spokesman Kevin Lowery told Reuters. He said production at the smelters in Fusina and Portovesme will then be curtailed as the company seeks to resolve the issues with the European Commission. Last week, Alcoa said it will temporarily idle operations at the smelters after the EC ordered it to pay back most of the state aid it has received in Italy since 2006. Alcoa said it would appeal the ruling and was curtailing operations at the smelters because of the uncertainty in obtaining future power supply and the financial impact of the EC decision.

The EC did not say how much Alcoa has to repay. Alessandro Ortis, chairman of Italy's energy regulator, said the government has been at work to find solutions and the regulator would also do its part. Enel , Italy's biggest utility and Alcoa's main power supplier in Sardinia, also hoped the government would find solutions for Alcoa to stay in Italy and keep local jobs. "For us it's fundamental that such important clients can remain in Italy," Enel's head of generation and energy management and markets division, Gianfilippo Mancini, told reporters on the sidelines of a conference in Sardinia. "Judging by comments from Alcoa and from the government, it seems they are working on an auspicious solution," he said. Without the state aid, Alcoa says, the two smelters are not viable at current Italian power rates. Between them, the two plants employ about 1,000 with an additional 1,000 indirect jobs, and have combined capacity of 194,000 metric tons of aluminum per year.

That's about 4 percent of Alcoa's total global capacity of about 4.8 million tonnes. Lowery said Alcoa's current production is down about 24 percent versus global capacity as a result of the economic downturn that hit demand in the past year. Statistics from the Brazilian Aluminum Association on Monday showed that Brazil's primary aluminum output in October fell 16 percent compared to the same month last year. Data showed cuts at Alcoa's Pocos de Caldas and Sao Luis units resulted in a 10.5 percent drop in the company's aluminum production in Brazil. Alcoa's stock was down 8 cents at .05 in Monday afternoon trading on the New York Stock Exchange.

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