(AA), an American aluminum company, said it had reached an agreement with workers' representatives to cut its aluminium smelter at the San Ciprit á n aluminum plant in Spain for two years because of rising energy prices in Europe. The scaling back campaign will begin on January 1, 2022, with the goal of completing it by the end of January 2022. The company promised not to consider a collective dismissal process for the San Ciprit á n smelter until December 31, 2025 at the earliest.
Alcoa expects to record restructuring-related costs of approximately $60 million, or 32 cents per share, in the fourth quarter of 2021, about half of which will be paid in 2022 and 2023 respectively.
The agreement calls for a reduction of 228000 tons of annual production capacity of the smelter within two years, and the company has promised to restart the smelter in January 2024.
During the reduction period, Alcoa will seek to secure long-term power purchase agreements as soon as possible, starting in 2024. The company also pledged $68 million in capital investment and $35 million in restart costs. As part of the agreement, workers will immediately stop strikes affecting aluminum smelters and alumina refineries.
In addition, the company promised to provide full wages and benefits to employees during the two-year reduction period, to extend the contractor's contract until 2024, and to provide new collective bargaining agreements, including a salary increase until the end of 2025.
As a result of production restrictions and agreements, Alcoa expects a pre-tax net loss of about $20 million to $25 million for San Ciprit á n in 2022. Aluminum mills are expected to post a net loss of about $65 million before tax in 2021, most of which will be affected in the fourth quarter, mainly due to higher electricity prices. As of December 2021, the average electricity price in the Spanish spot market was $276 per megawatt hour.
Alcoa said in a statement that the foundry would continue to operate during the production limit period, while the San Ciprit á n alumina refinery would continue to operate normally.
