Alcoa Corp. the largest US aluminum producer, said it initiated job cuts at an Australian alumina refinery amid a glut of the raw material, which is used to make aluminum.
(Bloomberg) — Alcoa Corp. the largest US aluminum producer, said it initiated job cuts at an Australian alumina refinery amid a glut of the raw material, which is used to make aluminum.
The Pittsburgh-based company said in a statement Wednesday it “initiated a restructuring program” at the Kwinana alumina refinery located near Perth, Australia and was taking a $6 million charge related to “employee severance costs to be paid through the first quarter of 2024.” The stock rose about 1% in after-hours trading.
The move comes just weeks after the company installed a new chief executive officer.
Alcoa last month abruptly announced that William Oplinger was replacing Roy Harvey as CEO. Shares of the company are down about 40% this year amid ongoing concerns of a global slowdown in consumption of the metal used in everything from kitchen appliances to automobiles.
The news of Oplinger’s installment as CEO comes at a time when Alcoa has been struggling with operational and permitting setbacks in Australia for bauxite, a key feedstock for the refineries.
The Kwinana plant was the first of Alcoa’s three Western Australia alumina refineries that’s been in operation for about 60 years, with the capacity to produce about 2.2 million metric tons of the raw material.
Alcoa has “continued to make progress with relevant state government agencies in support of the annual mine approvals process for bauxite mining at the Huntly and Willowdale mines,” the company said.
Harvey, the former CEO, oversaw the transition of the more-than century-old American company after its late 2016 split from Arconic Corp., the name given to the value-added parts operations.
Harvey spent years shoring up the balance sheet, paying down debt and pension plan liabilities and making the commodity business more efficient. He oversaw the company’s headquarter change from New York City back to its original home of Pittsburgh, known for its iconic role as America’s steel city. The move underscored Harvey’s penchant for frugality.
For the third quarter, the company reported adjusted earnings before special items of $70 million, topping an estimate of $47.9 million.
“We saw positive improvements in raw material and production costs, but lower average realized pricing for alumina and aluminum had the biggest impact on our results,” Oplinger said in the statement.
The company’s alumina business segment accounts for some 28% of total revenue. The price of aluminum is down about 8% this year, headed for a second straight year of losses.
(Adds shares in second paragraph. An earlier version corrected Alcoa spelling in fourth paragraph)
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