Pittsburgh aluminium pioneer Alcoa Corporation halted plans to curtail its smelter in San Ciprián, Spain last week after a local court handed down a decision affecting the process for laying off the workforce there.
The High Court of Justice of Galicia issued the decision last Thursday in a suit brought by the local workforce after Alcoa announced in early October that it had decided to close down the smelter. Alcoa and the plant’s union had conducted four months of talks prior to the announcement.
The Spanish court said in its opinion last week that the layoff process then underway was “null and void,” leaving Alcoa no choice but to cease the process.
Alcoa maintains it has acted in good faith throughout the process, and it says its actions have complied with relevant laws as well. However, the 228 thousand metric tons per annum smelter still suffers from “significant and permanent structural issues,” notes the firm, making the task of keeping the plant open and profitable all but impossible.
The alumina refinery at San Ciprián is not part of this dismissal process. However, due to a strike at both the aluminium smelter and the alumina refinery, Alcoa will record a pre-tax loss in the current quarter of around US$10 million, mostly attributable to the refinery. Last week’s court ruling does not have any effect upon the labor strike.
The San Ciprián aluminium smelter has struggled in recent years to show a profit due to high labor costs and high power contracts. Alcoa stated in October that the aluminium smelter’s financial shortcomings are structural, and it has no expectation that this will change in the near future. Through 2018 and 2019 the plant reported a loss totaling US$126 million.