In a cost-cutting measure designed to improve the company's competitiveness, aluminum giant Alcoa announced Thursday evening its intention to close down 12 percent of its global smelting capacity.
More than half of the company's announced cutbacks are taking place in the United States. Company officials intend to permanently close its smelting operations in Alcoa, Tenn., as well as two of six idled potlines in Rockdale, Texas.
The three closures constitute 7 percent of the company's anticipated closures or 291,000 metric tons. Alcoa's global smelting capacity currently stands at 4.5 million metric tons per year, according to a company release announcing the closures.
Future closures will lower that number by another 240,000 metric tons when the company curtails a further 5 percent of its production.
The closures and curtailments are being prompted by falling aluminum prices, read the company's release, and should be complete by the end of the first half of 2012.
These are difficult but necessary steps to improve Alcoa's competitiveness, preserve and grow shareholder value and protect jobs in the rest of the Alcoa system, said Chairman and CEO Klaus Kleinfeld.
The goal of the measures is to cut company costs and slide the company down along the world aluminum production cost curve by 10 percentage points, said the release.
The company is the world's largest producer of aluminum. The reductions and curtailments are expected to cost the company anywhere between $155 million and $165 million.
The company's stock ended down by Thursday's market close, closing at $9.36. The stock kept falling, however, in after-hours by almost 16 cents to $9.20.