MELBOURNE (Reuters) - Alcoa’s alumina production has likely been hit by a four-week strike at its Western Australian operations, the Australian Workers’ Union said on Wednesday, raising the prospect of a widening supply deficit in the key aluminum-making ingredient.
A spokeswoman said Alcoa had no additional comment on Wednesday, after it had said there has been no significant impact on output from the strike that began on Aug. 8.
A vote by the striking workers on whether to accept a new workplace agreement is due to close on Thursday, with the union anticipating a strong “no” vote that could prolong the industrial action.
The strike comes as the global market for the aluminum-making raw material is suffering a shortfall. Prices for the white powder have surged this year, which has boosted costs for aluminum makers like Rio Tinto that buy in some alumina, while offering a bonanza to producers that make more than they need like South 32.
Prices for alumina futures traded at $629.35 a tonne this week, up 40 percent from $450 in late June.
“As a result of the industrial action, we would estimate that production has been affected significantly,” AWU National Secretary Daniel Walton said in a statement.
“Fully staffed, refineries should produce about 26,000 tonnes of alumina per day. Currently more than half the operational staff responsible for this work are on strike,” he said in a later statement.
The global alumina market has been in a shortfall since early this year, after the U.S. put sanctions on U.C. Rusal, and as the world’s largest plant, Alunorte in Brazil, shuttered some production.
Around 1,500 workers at three alumina refineries and two bauxite mines in Western Australia state walked out on Aug. 8 over a new workplace agreement that they say does not offer sufficient job security.
The refineries account for around 9.3 million tonnes of capacity or some 8 percent of the world supply of alumina.
The refineries and mines are owned by Alcoa of Australia Ltd, which is part of the AWAC group of companies and owned 60 percent by Alcoa and 40 percent by Alumina Ltd.
Reporting by Melanie Burton; Editing by Joseph Radford