Alcoa announces partial restart of Warrick aluminum smelter operations

July 13, 2017 12:30:02 PM

SEATTLE (Scrap Monster): Alcoa-the global industry leader in bauxite, alumina and aluminum products has announced plans to partially restart operations at Warrick Operations aluminum smelter in Evansville, Indiana, after almost a year of closure. The proposed restart is expected to ensure supply to Warrick Operations’ rolling mill, thereby improving the competitiveness of the mill. As per Alcoa press release, three out of five potlines will be restarted initially. It must be noted that the company had closed the Warrick smelter operations in March last year.

According to company press release, the work to restart three lines will commence soon and is expected to be completed by second quarter next year. The molten metal from the smelter will be fed to Warrick rolling mill and is expected to contribute to the planned increase in production from the mill. The partial restart will add nearly 275 additional jobs. This will include employees who are newly hired, recalled from layoff status and those transferred from its existing locations. Further, the restart is expected to incur after-tax costs of $30-$35 million in Q3 and Q4 of the current year.

Tim Reyes, president of Alcoa’s Aluminum business unit stated that the restart will provide an efficient source of metal for the Warrick rolling mill. The action will enable the company to more fully utilize the assets of the integrated site for the benefit of investors, customers, employees and the nearby communities. The remaining two potlines will be classified as curtailed capacity and will remain idle, Reyes added.

The restart plan is supported by the state of Indiana and Warrick County. The Indiana Economic Development Corp. (IEDC) has already offered up to $2.4 million in tax credits and up to $100,000 in training grants.

The restart pins its hopes on Trump administration's new policy to launch investigation into the harms caused to local aluminum industry on account of increased imports. It also anticipates further rise in aluminum prices going forward. Incidentally, aluminum prices have surged by almost 12% since the start of this year.

The company had announced that aluminum manufacturing has officially ceased at the plant by mid-March last year, citing that the sharp drop in aluminum prices had made the Warrick smelter uncompetitive. It had laid off around 325 workers, majority of them belonging to the United Steelworkers Local 104. The remaining out of the total 600 employees had either accepted company offers or had migrated to new job. The operations of the rolling mill and the power plant were unaffected by the idling of the smelter. Alcoa had then stated that the action is part of company’s one-year long review of its smelting and refining operations intended to cut cost of operations.

The Warrick Operations smelter, commissioned in 1960, has an annual production capacity of 161,400 metric tons. It was the largest operating smelter in the entire US at the time of its closing.