Oct 16 Alcoa Inc said on Wednesday that
the massive smelter run by the Ma'aden-Alcoa joint venture has
temporarily shut down one of two potlines due to problems during
Repairs at the $10.8 billion facility, which Alcoa owns and
runs with Saudi Arabian Mining Co, could stretch well
into next year, and Alcoa said it will now accelerate the
ramp-up of the second, unaffected line.
Production stopped "after a period of pot instability"
during ramp-up of the potline, it said. It said it does not
expect any impact on customers.
Combined, the two lines will have the capacity to produce
740,000 tonnes per year of aluminum. The rest of the operation -
which includes a mine, a refinery and a rolling mill - remains
on schedule, Alcoa said.
Few other details were available and it is not clear how, if
at all, the shutdown may affect Alcoa's target for the smelter
to reach full capacity sometime next year. A potline is a series
of containers used to reduce, or smelt, aluminum.
Glitches after commissioning are not unusual. But this
outage comes at a crucial time as Alcoa shifts primary aluminum
output to the Middle East, where power costs are lower, and
shuts higher-cost output in Europe and North America.
The global industry is also struggling with weak aluminum
prices and falling physical premiums, as a massive surplus of
metal washes around the world.
"Alcoa now have a problem they'll be talking about through
2014," said Robert Unger, principal at aluminum industry
consultancy Planned Technology Associates Inc.
The outage, coming on the heels of recent cuts at other
producers, gave aluminum prices a small boost, even as most
analysts agree more capacity needs to be taken offline before
the global surplus of an estimated 10 million tonnes is used up.
Aluminum benchmark prices on the London Metal
Exchange were up 0.38 percent at $1,856 per tonne, after
touching an intraday high of $1,865.75.
Alcoa owns 25 percent of the joint venture, with Saudi
Arabian Mining Co holding the balance.
The Saudi project is important to Alcoa, and not just
because of its size. The company has said it should be the
lowest-cost facility in the world, and it is ramping up as the
industry pushes to cut expenses.
Alcoa said it expects to bring the potline back into service
between the first and second quarter of next year.
When Alcoa reported quarterly earnings last week, Chief
Financial Officer William Oplinger said both potlines at the
smelter would be operating by the end of this year.
"Ramping up production at this facility will help them
manage their company-wide input costs," said Morningstar analyst
Andrew Lane. But Lane said that in the grand scheme of things,
the idled potline is a relatively minor issue.
Alcoa shares were up 1.3 percent at $8.49 on the New York
Stock Exchange late on Wednesday morning.