Alcoa updates 2020 aluminum shipments outlook

Alcoa Wagerup alumina refinery in Western Australia. Image: Alcoa

Alcoa has taken a hit from lower aluminium prices and reduced its production volume during the first quarter of this year.

This was materialised in a 2 per cent drop in the quarterly revenue, totalling $US2.4 billion ($3.76 billion).

Alcoa plans to generate $US700 million in cash from cost cutting initiatives during the coronavirus crisis period.

The company is set to curb the remaining 230,000 tonnes of uncompetitive smelting capacity at the Intalco smelter in Washington State.

This has driven Alcoa to lower its annual aluminum shipments outlook from 3-3.1 million tonnes down to 2.9-3 million tonnes for this year.

Alcoa also sold the Gum Springs waste treatment facility in Arkansas, the United States in January, generating $US200 million in cash.

In October last year Alcoa announced that it intended to sell its non-core assets over the next 12 to 18 months to generate up to $US1 billion in cash.

The company now aims to manage cash through “the economic uncertainty from the pandemic,” according to Alcoa president and chief executive Roy Harvey.

“While we reported a solid first quarter with a strong cash balance, the world has fundamentally shifted due to the COVID-19 global pandemic, and we are taking decisive actions to address this crisis,” Harvey said.

“Most importantly, we are focusing on the care and safety of our workforce, our operations, and our communities. We have implemented numerous steps for business continuity and are acting quickly to protect financial stability.”

All of Alcoa’s bauxite mines, alumina refineries and aluminium smelters remain operational, with the bauxite and alumina shipment outlook remaining unchanged.

Alcoa will continue to evaluate the competitiveness of its existing production capacities, focussing on 1.5 million tonnes of global smelting capacity and four million tonnes of global alumina refining capacity.

In Western Australia, Alcoa continued to connect with “some of the world’s smartest people” to improve the descaling process at the Wagerup alumina refinery.

Alcoa collaborated with Unearthed to deliver a competition called Scale Away, challenging 90 global participants to come up with ways to more efficiently descale tanks, vessels and pipes.

Scale build-up from the refining process may cause lost production due to the reduced availability in tank volume.

Following six-week development period, three winners were announced from Australia, Canada and the United States.

The proposed solutions range from high-pressure cleaning nozzle design to groundbreaking technologies that make surfaces repel water permanently, therefore resistant to scale.

Alcoa’s digital transformation operations director Ali Nooraii said unearthing ideas and innovation via this approach was an industry game changer.

“The Unearthed concept produces benefits for both Alcoa and the companies and innovators involved,” he said.

“In addition to establishing connections, there is potential to co-develop and trial the technology solutions within our operations locally and even globally.”

The competition offered $10,000 in prize money and the opportunity to work with a major resources company.

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