Alcoa Suspends Production at Saudi Smelter
Aluminum giant Alcoa Inc. (AA) announced that it has temporarily halted production at one of two potlines at the smelter of its Ma'aden-Alcoa joint venture in Saudi Arabia. Alcoa shut the production after a period of pot instability. The joint venture is working to restore the potline.
Alcoa expects to complete the restoration and have the potline back online between the first and second quarter of 2014. As a result, the company said it will accelerate the ramp up of the second potline.
Alcoa does not expect any impact on its customers, and there is no impact on any other part of the joint venture, including the mine, refinery and rolling mill, which all remain on schedule.
The $10.8 billion joint venture is still in its initial start-up phase. Alcoa formed a joint venture with Ma’aden, the Saudi Arabian mining company, to develop a fully integrated industrial complex in Saudi Arabia. It is intended that the complex will become the world’s preeminent and lowest-cost supplier of primary aluminum, alumina, and aluminum products, with access to the growing markets of the Middle East and beyond.
Alcoa, a prominent player in the mining industry along with Aluminum Corporation of China Limited (ACH), Atlatsa Resources Corporation (ATL) and BHP Billiton Limited (BHP), is a world leader in production and management of primary aluminum, fabricated aluminum, and alumina. The company is also the world’s largest miner of bauxite and refiner of alumina.
Alcoa released its third-quarter 2013 results recently. The company posted a profit of $24 million or 2 cents per share in the third quarter of 2013 compared with a loss of $143 million or 13 cents per share in the year-ago quarter. The results include restructuring and other one-time charges/gains of $96 million.
Excluding one-time special items, earning was $120 million or 11 cents a share in the quarter, ahead of the year-ago earnings of $76 million or 7 cents per share and the Zacks Consensus Estimate of 6 cents. Productivity gains, strong demand from auto makers, healthy operating performance and cost cutting supported the results despite lower metal prices.
Revenues dropped roughly 1.2% to $5,765 million from $5,833 million in the year-ago quarter but exceeded the Zacks Consensus Estimate of $5,713 million. The decline was due to weak aluminum prices, offset by strong demand in the aerospace and automotive end markets.
Alcoa currently retains a short-term Zacks Rank #3 (Hold).
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