Alcoa reaches agreement on future of San Ciprián foundry

Company to close aluminum smelter for two years with commitment to restart

PITTSBURGH – December 29, 2021 – Alcoa Corporation (NYSE: AA) and workers’ representatives at the company’s aluminum plant in San Ciprián, Spain have reached an agreement to address persistent problems with sky-high energy prices.

The agreement, which was signed on December 29, 2021, provides for a two-year reduction in the annual smelter capacity of 228,000 metric tonnes and a commitment by the Company to begin the smelter restart in January 2024.

“With this agreement, we now have a path to resolve the significant challenges the facility faced and can begin building a stronger smelter in two years,” said Roy Harvey, President and CEO of Alcoa . “It has been a difficult road for everyone involved, and we are looking to the future, working constructively with our employees and stakeholders to implement the agreement we have reached.”

Reduction activities will begin on January 1, 2022, with the goal of being completed by the end of January 2022. During the reduction period, Alcoa will seek to enter into long-term power purchase agreements as soon as possible, at as of 2024. In addition, the company incurred $ 68 million for capital investments and $ 35 million for restart costs. As part of the deal, workers will immediately cease strike action that has affected both the aluminum smelter and the alumina refinery.

In addition, the company is committed to providing employees with full wages and benefits during the two-year cutback period, extending the contracts of outsourcing companies until 2024 and providing a new collective agreement. which includes salary increases extending until the end of 2025. The Company has also committed that no collective dismissal procedure will be considered for the San Ciprián foundry before December 31, 2025 at the earliest. .

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As a result of the deal, Alcoa expects to record restructuring-related charges in the fourth quarter of 2021 of about $ 60 million (before and after tax), or $ 0.32 per share, with about half costs to be paid in each of 2022 and 2023.

As a result of the described reduction and the agreement, Alcoa expects the San Ciprián aluminum plant to record an annual net loss before tax of approximately $ 20 to 25 million in 2022, on the basis of current market prices. In 2021, the aluminum plant is expected to post a pre-tax net loss of around $ 65 million, with most of the impact in the fourth quarter based on rising electricity prices. As of December 2021, the average price of electricity on the spot market in Spain is $ 276 per megawatt hour.

During the reduction, the smelter will continue to operate and the San Ciprián alumina refinery will continue to operate normally.

About Alcoa Corporation

Alcoa (NYSE: AA) is a global industry leader in bauxite, alumina and aluminum products, and is built on solid values ​​and operational excellence dating back 135 years to the groundbreaking discovery that made aluminum an affordable and vital part of modern living. Since the development of the aluminum industry, and throughout our history, our talented Alcoans have continued with revolutionary innovations and best practices that have led to efficiency, safety, sustainability and more communities. strong wherever we operate.

Dissemination of company information

Alcoa intends to make future announcements regarding the company’s developments and financial performance through its website, www.alcoa.com, as well as through press releases, documents filed with the Securities and Exchange Commission, conference calls and webcasts.

Forward-looking statements

This press release contains statements relating to future events and expectations, including those relating to the downsizing of the foundry and associated commitments and activities and the Company’s expectations regarding the timing of activities and estimates of the financial impact. partner, and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing words such as “ambition”, “anticipates”, “believes”, “could” , “Develop”, “strive”, “estimate”, “discount”, “forecast”, “objective”, “intention”, “may”, “prospect”, “plans”, “potential”, ” projects “,” achieve “,” research “,” sees, “” should “,” targets “,” will “,” work “,” should “, or other words of similar meaning. All Alcoa statements Corporation that reflect expectations, assumptions or projections about the future, other than the d statements of historical fact, are forward-looking statements. Forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and changes in circumstances that are difficult to predict. Although Alcoa Corporation believes that the expectations reflected in the forward-looking statements are based on reasonable assumptions, it cannot guarantee that these expectations will be achieved, and actual results may differ materially from those indicated by these forward-looking statements. statements due to various risks and uncertainties. Additional information regarding factors that could cause actual results to differ materially from those anticipated in forward-looking statements is contained in the documents filed by Alcoa Corporation with the Securities and Exchange Commission. Alcoa Corporation disclaims any obligation to publicly update any forward-looking statement, whether in response to new information, future events or otherwise, except as required by applicable law.

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