Metals News
Alcoa to Shut Italy Aluminium Plants by Feb 6.
industry news
Jan 29,2010

LONDON, Jan. 29 -- U.S. aluminium producer Alcoa Inc (AA.N: Quote) said it plans an orderly shutdown of its two Italian smelters by Feb. 6, despite government efforts to find energy at a competitive price.

"The best course, and the one that provides the best opportunity for the future operation of these smelters is, orderly curtailment, which we plan to achieve by February 6," Alcoa said in a statement.

But the company committed earlier this week to restarting one of the plants after an orderly shutdown if it can secure cheap power and business conditions are conducive.

Later, Alcoa spokesman Kevin Lowery told Reuters that the Italian government had presented the aluminum giant with an offer that would not necessarily forestall a smelter shutdown, but could lead to further discussions and a possible restart.

"We got an offer from the (Italian) government. It is definitely a very positive step, but it doesn't necessarily get us all the way there," said Lowery.

He added that Alcoa will proceed with its curtailment plans, but had asked for continued discussions with the Italian government.

"We told them that while we continue to talk, we are going to continue the curtailment. But let's keep talking, because if we have the opportunity to restart these smelters, we will restart them," said Lowery.

In November, Alcoa said it would temporarily idle operations at the smelters with a total capacity of 194,000 tonnes a year after the European Commission ordered it to pay back most of the state aid it had received in Italy since 2006.

As a result Alcoa anticipates a cash payment of $300-400 million and said it could not assume further financial risk.

In the statement, the producer expressed appreciation for efforts by the Ministry of Industry and the Italian government to try and secure energy at a competitive price for the Fusina and Portovesme plants.

"The issue right now is that the EU has to say their (Italy's) proposal is okay. Otherwise, we are right back at the same spot where we were at the get-go," Lower said.

But the statement said action to date was not enough to avoid curtailment until an EU-approved solution was in place.

"...The price of energy available today through the use of the tools provided by the government is not at a level that allows us to operate our two smelters profitably or invest in our facilities to improve their competitiveness," it said.

The European Aluminium Association expressed concern at the news and also at the European Commission's announcement on Wednesday that it is investigating whether Greece's state-owned power utility illegally subsidised smelter Aluminium of Greece by selling it electricity below market prices.

"At a time when EU authorities claim they are doing their best to boost growth and jobs, and praise themselves for their crisis response, how can they at the same time find Europe's industries guilty of trying to survive?" asked Patrick de Schrynmakers, the EAA's secretary-general, in a statement.

"This has to stop, or two-thirds of Europe's aluminium smelters will close before 2013," he added.


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