A partial reason for yesterdays recoveryAlcoa may shut Wash. plant, sees $4 mln charge
Wed July 30, 2003 05:28 PM ET
NEW YORK, July 30 (Reuters) - Alcoa Inc. AA.N , the world's largest aluminum producer, on Wednesday said it is preparing to temporarily cut production at its Ferndale, Washington, aluminum smelter on Sept. 30 because of higher power costs.
The Pittsburgh-based company, which owns 61 percent of the plant, said it may close the plant, which produces about 110,000 metric tons a year, on that date because of an expected rate increase by the Bonneville Power Administration, the biggest power provider in the U.S. Northwest.
"Since there has been no indication that BPA will significantly lower power rates, we have to prepare for a curtailment," said Bernt Reitan, an Alcoa vice president and president of Alcoa Primary Metals.
The plant, known as Intalco, employs about 700 people, according to reports in the Bellingham (Washington) Herald. Alcoa did not immediately return a call seeking further comment.
Alcoa said it expects closure and severance costs will trim third-quarter net income by about $4 million.
Alcoa posted second-quarter profit of $216 million, or 26 cents per share. Analysts polled by Reuters Research, a unit of Reuters Group Plc, on average expect third-quarter per share profit of 29 cents.
The company said it has sent notices to all Intalco workers advising of possible layoffs. It said employees will be paid through Sept. 30, but if that Intalco can secure power rates low enough to allow the plant to run profitably, cutbacks won't be needed.
The other 39 percent of the plant is owned by a Japanese consortium, Mitsui & Co., a securities filing shows.