SYDNEY Aug 1 Alcoa Inc closed its
unprofitable Point Henry aluminium smelter in Australia on
Friday underscoring the dire market conditions facing producers
amid a flood of new Chinese capacity.
Alcoa announced in February it intended to progressively
shut down operations at the 51-year-old smelter after a two-year
review found there was no way to make the plant
"This is the end of an era and a very sad day for our 500
employees, their families and the Geelong community," the
smelter's manager Warren Sharp said, referring to the town in
the southern state of Victoria where the smelter is located.
Australia was once one of the world's biggest aluminium
producing countries but slipped to fifth in recent years as high
costs and low prices led to curtailments.
The closure of the Point Henry facility eliminates around
190,000 tonnes of annual aluminium-making capacity, equal to
about 10 percent of Australia's total yearly output.
Since 1963 the smelter has produced more than 7.3 million
tonnes of aluminium -- enough to make more than 490 billion
In total, producers outside of China eliminated up to 1.2
million tonnes of capacity last year and further reductions of 1
million-1.5 million tonnes are expected in 2014.
While Alcoa and other producers close old facilities that
can no longer compete, China's aluminium industry is expanding,
albeit at a much slower rate than in the last decade.
Morgan Stanley sees Chinese capacity growing at a compound
rate of just 5 percent a year through 2019 versus 15 percent
between 2003 and 2013, and notes that since April China's daily
operating rate has dropped below peak 2013 levels, in part due
to tariffs on electricity use.
The price of aluminium, also used in aerospace,
construction and automaking, is up 19 percent from its
four-and-a-half-year low in February of $1,671.25 a tonne.
Alcoa on July 8 forecast a global aluminum supply deficit of
930,000 tonnes, an increase from a deficit of 730,000 metric
tonnes estimated in the first quarter.
(Reporting by James Regan; Editing by Michael Perry)