HOUSTON, April 5 (Reuters) - Alcoa Inc (AA.N) said on Monday it plans to shut and demolish two previously idled plants, citing market fundamentals.
Alcoa will permanently shutter its Eastalco smelter in Frederick, Maryland which has a capacity of 195,000 metric-tons-per-year and its smelter in Badin, North Carolina which has a capacity of 60,000 metric-tons-per-year, it said in a regulatory filing.
Global demand for aluminum has not rebounded as quickly as that of steel and other metals since the start of recession started in December 2007.
The price of the metal plunged 18 months ago from highs of about $3,300 per tonne, and has slowly risen to around $2,300 on Monday.
The Alcoa plant closures will result in an after-tax charge of $120 million in the first quarter, it said in a filing with the U.S Securities and Exchange Commission.
"These smelters were not running," Affiliated Research Group analyst Charles Bradford said. "Eastalco, in particular, was a situation where the power contract ran out.
"And it was a perfectly good smelter from an efficiency standpoint and every other measure you would look at, except that the power cost that was offered to them was just so high that you could not justify running the plant," he added.
The company also expects to record additional charges of $10 million to $15 million for various costs related to the demolitions from 2011 through 2015, it said.
Bradford told Reuters the destruction of the two facilities "won't affect the market, but it will affect Alcoa's cost.
"Because even if you are not operating the plant and don't even have it on maintenance, it costs you for security," he said.
Alcoa will also take an $80 million charge in the first quarter related to the U.S. healthcare overhaul signed into law last month by President Barack Obama, it told regulators.
Also on Monday, Alcoa said it is increasing its investment in a planned $10.8 billion aluminum complex in Saudi Arabia after some of the U.S. company's partners in a consortium dropped out
Going to get pretty crowded there on Capitol Hill, if ‘Nostrils’ Waxman calls every company making similar reports (as they are legally obligated to do by a law passed by the very body Waxman is a member of) on the carpet.
I predict that Nostrils will not call anyone when they return from Easter recess. The more companies that make these announcements, the less likelihood that all of them are wrong and Congress (parents of Obamacare) are right. Even a bat boy look-alike like Waxman will realize that.
Harry the rat is not going to like this
Thanks Need4Truth.
Bad news for many in my Texas area.
My latest list:
ATT 1 billion
Caterpillar 100 million
Deere & Co. 150 million
AK Steel 31 million
3M 90 million
Valero Energy 20 million
Prudential 100 million
Allegheny Tech 5 million
Illinois Tool Works (ITW) 22 million
Boeing 150 million
Xcel Energy 17 million
Goodrich Corp 10 million
Honeywell 13 million
Lockheed Martin Corp 96 million
Ingersoll-Rand Plc 41 million
Eaton Corp 25 million
Carpenter Technology Corp 5.9 million
Verizon 970 million
Exelon 65 million
Alcoa 80 million
Waxman will need to reserve a ballroom for his hearings at this rat, er make that rate.
Can’t wait for Toyota to take a $16.4 million charge!
And that’s one whopper of a tin foil hat!