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NEW YORK/PARAMARIBO–Alcoa Inc., majority shareholder in Suralco (AA) announced on Thursday that it plans to cut alumina production by about 2% a year. The company said that this aligns its output with its plans to reduce smelter capacity by 12% in the first half of this year amid high costs and slumping prices. How this cut in production of about 390,000 metric tons a year will affect production in Suriname is not known yet.
The aluminum producer on Thursday said the move will reduce its capacity in the Atlantic region by about 4%. Alcoa’s Atlantic-basin refineries are located in Brazil, Jamaica, Spain, Suriname and Texas. The region, where it aims to avoid adding to an oversupply, accounts for about half of the company’s refining capacity of about 18 million metric tons a year.
In Suriname Alcoa owns 55% of the operation of Suralco, a key supplier of alumina to Alcoa facilities and markets throughout the United States and Europe. Suralco operates an alumina refinery at Paranam and hydroelectric facilities at the Afobakka lake. Paranam has a production capacity of 2.2 metric tons per Year, but in 2009 the company already cut output at its refinery by some 40% or 870,000 tons per year due to low demand. The company said then that the decision was made, to protect the long-term viability of the aluminum industry in the country.
Alcoa in January reported that it swung a fourth-quarter loss amid slumping prices and rising costs. The company’s profit had been surging in previous quarters thanks to demand from automobile and aerospace companies and emerging markets like China, but third-quarter results disappointed as demand weakened in areas like Europe, aluminum prices continued to fall and raw-materials costs climbed. Shares were down 4 cents at $9.77 in premarket trading. Through Wednesday’s close, the stock is down 46% in the past year.
PARAMARIBO–Aluminum multi-national Alcoa’s operations in Suriname have drawn optimism from finance and investing specialists. The outlook of aluminum and alumina prices is good and with rapid industrialization in China and India, Alcoa, which operates Suralco bauxite mining company and refinery in Suriname, is set to benefit on short and mid-long term
“We are also optimistic about Alcoa’s long-term growth projects in China, Australia, Jamaica, Suriname and Brazil. Demand from these countries is expected to increase its alumina and aluminum production capacity while lowering its operating costs,” Zacks Investment Research wrote on Tuesday May 17.
Suriname’s Suralco bauxite refinery has helped secure 2010 profits for its mother company Alcoa World Alumina and Chemicals (AWAC), Mining Weekly reports. AWAC, the online mining magazine reports, has reported a return to profitability for the 2010 financial year, posting a net profit of $35-million, a turn-around in comparison to the after-tax loss of $24-million on the previous financial year. To cover the reduction in production at the company’s Brazilian operations, performance at the Suralco refinery at Paranam in Suriname and at Point Comfort refinery in Texas had been stepped up to meet customer demand.
The performance of the Suriname and Texas mines yielded a 34 percent increase in the 2010 revenues of AWAC, a joint venture between Alumina (40% owned) and Alcoa (60% owned).
Alumina CEO Bevan explained that strong market conditions in 2010 have resulted in improved pricing, with realized alumina prices up 28% on the previous year. There has been an improving demand for aluminum, which AWAC responded to with a record production of 15,2-million tons.
“The global alumina market is entering a growth phase owing in part to the rising demand for alumina from independent, non-integrated smelters, including many in China. Global demand for alumina is forecast to increase by 12% in 2011 and global supply and demand is expected to be in balance,” said Bevan. AWAC has bauxite mines in five countries.