Alcoa Closes Rockdale Site, Sells Portovesme Aluminium Smelter to Italian Government
23 December 2017 by Staff
Pittsburgh aluminium pioneer Alcoa Corporation announced the fate of two idled smelting sites in its portfolio yesterday, opting to close a site in Texas and sell another site in Italy.
Per a press release published on its website, Alcoa revealed that it is permanently closing its Rockdale operations, which includes an aluminium smelter and casthouse and an aluminium powder plant among other related assets. The site, which has stood idle for almost nine years, was not deemed by the company to have a sufficient economic contribution to justify restarting operations. Alcoa says the 30,000 acres of land at the site remains on the market as well.
The company indicates that the deal will realize annual adjusted EBITDA benefits of roughly US$3 million once the site is fully decommissioned in 2022. The cost of closure is estimated to total US$53 million over the intervening five years. A pre- and after-tax charge of US$55 million will be borne by Alcoa in the fourth quarter of this year in relation to the site’s closing.
On the European continent Alcoa announced that the Portovesme smelter in southern Sardinia would be sold to Invitalia, the Italian state agency for economic development. Alcoa says the deal for the facility, which has been idle since 2012, satisfies formerly outstanding issues between the firm and the Italian government, including past energy tariffs and a groundwater remediation project.
Alcoa anticipates a pre- and after-tax reserve reduction of US$22 million in the fourth quarter due to the Portovesme sale. An annual adjusted EBITDA benefit of US$4 million is expected next year upon closure of the sale, and cash outlays for the settlement are expected to total between US$40 million and US$50 million spread over the coming five years.
Alcoa’s President and Chief Executive Officer Roy Harvey emphasized that the moves enhanced the firm’s overall economic wellbeing.
“We continuously evaluate our portfolio of global assets against many factors to optimize value. Achieving a resolution on these two assets further streamlines our Company as we continue to execute against our strategic priorities.”