Alcoa announced on May 16 that it is postponing construction of a new potline at its Baie-Comeau smelter in Québec as part of a revised modernization plan for the smelter. However, the company will begin preparations for the upgrade by investing $100 million in the smelter over the next three years and by permanently closing the plant’s two Soderberg potlines.
Alcoa now expects the new potline to be in service in 2019 instead of 2016, subject to approval by the Alcoa board. The change in the construction schedule was made in response to conditions in the aluminum market, where the price dropped from about $0.98/lb in mid-December 2012 to about $0.82/lb in mid-May 2013.
The price of aluminum hit a recent peak above $1.20/lb in early June 2011.
The $100-million investment at Baie-Comeau includes $30 million that will be used to upgrade the plant’s casthouse facilities in support of the growing automotive market. This is in addition to $75 million already dedicated to rebuild the Baie-Comeau port facilities to better meet the future needs of a modernized plant.
“The government of Québec proved to be very open to reviewing the schedule when it became important for Alcoa to adapt to market realities and make the project as cost-effective as possible,” said Martin Brière, president of Alcoa Canada Primary Products. “These efforts will help move our Baie-Comeau plant down the global aluminum cost curve, and continue to provide important economic benefits to the region.”
The closure of the two Soderberg potlines, which are among the highest-cost smelting capacity in the Alcoa system, will be complete in August. The two lines represent 105,000 mt of capacity and are part of 460,000 mt of smelting capacity that Alcoa announced was under review on May 1.
That review includes facilities across the Alcoa system and is focused on higher-cost plants and plants that have long-term risk due to factors such as energy costs or regulatory uncertainty. Possible curtailments could affect 11% of Alcoa’s global smelting capacity.
As of May 1, 568,000 mt, or 13%, of Alcoa’s annual smelting capacity was idle.