On 8 October Alcoa decided to curtail its San Ciprián aluminium smelter in Spain and to dismiss around 530 employees.
The curtailment of the smelter's annual production capacity of 228,000 t is expected to be complete in the first quarter of 2021. Approximately 100 employees will remain to operate a portion of the casthouse.
“As we’ve shared with our stakeholders throughout this process, the unfortunate reality is that the San Ciprián smelter is uncompetitive, and we do not expect its significant structural issues to change,” said Alcoa boss Roy Harvey. “While we have explored several options in the past months, curtailment is necessary to stop the continuing economic losses. We understand that this is a difficult outcome, and we are committed to minimizing the impacts on our employees as we work together to safely curtail the site and continue to meet all regulations.”
San Ciprián aluminium smelter loss-making for years
Continued operation of the smelter is not viable due to permanent factors such as an uncompetitive energy framework in Spain, global overcapacity in aluminium production and depressed prices, the company said in a press release. In the year to September, the aluminium plant incurred a net loss of USD45 million. In 2018 and 2019, the aluminium plant had combined net losses of USD 126 million. Associated with the decision, Alcoa expects restructuring charges of USD 35-40 million (pre- and after-tax) in the fourth quarter of 2020 for employee-related costs, which are all cash-based charges expected to be paid primarily in the first half of 2021.
Worker representatives aim for legal proceeding
Alcoa will offer severance packages and employment services for those affected by the closure. Alcoa notes that the workers’ representatives have previously stated publicly that they intend to challenge the collective dismissal in a legal proceeding. Should this occur, Alcoa will defend its actions, but the timing and amount of the charges could be impacted.
The alumina refinery at San Ciprián is not affected by the curtailment and will continue to operate.