Alcoa Cuts 120,000 Tons Aluminum Output On High Power Prices

SINGAPORE (Dow Jones)-U.S. aluminum producer Alcoa Inc. (AA) will immediately cut aluminum output at its Rockdale smelter in Texas by half, or approximately 120,000 metric tons, on account of rising energy prices, the company said in a press statement.

Alcoa said three of its six potlines will be idled because its local energy costs rose to as much as $2,000 to $4,000 per-megawatt-hour during peak hours. The move will result in 250 employees getting laid off, it said.

"There have been ongoing supply issues at the dedicated power generating unit adjacent to our plant, which has forced us to go into the open market to secure power," John Thuestad, President of Alcoa’s U.S. Primary Metals division, said in the statement Thursday.

"Unfortunately local energy costs have escalated significantly over the past few weeks to an unsustainable level and we have no choice but to idle production that is reliant on uncompetitive power."

The three other potlines will be operated using contracted long-term power.

Alcoa said it will work with its power supplier Luminant to achieve better prices, but didn’t say when the potlines will be restarted.