Thousands of Alcoa workers in Western Australia face an uncertain future as the global aluminium giant conducts a major review of its smelting and refining operations.
The US-based giant is reviewing its global smelting and refining capacity over the next 12 months as it looks to cut costs, divest assets, reduce plant sizes or shut them.
Alcoa’s Kwinana refinery, south of Perth, is now in the spotlight as it is the company’s least profitable and oldest processing operation in WA, employing more than 1,000 people.
The review follows the closure of Alcoa’s 50-year-old Point Henry aluminium smelter at Geelong in 2014 after the company decided it had no prospect of becoming financially viable.
Around 5,000 people are employed at Alcoa’s Australian operations, with the company’s alumina production in WA accounting for more than 10 per cent of total world demand.
Australian Workers Union Branch secretary Stephen Price said in the past Alcoa had curtailed production to minimise supply, but he is hopeful that enough restructuring and productivity improvements have already been carried out in WA.
“Kwinana’s had a lot of focus on it over the last few years and as a result they’ve increased their productivity and lowered their costs,” Mr Price said.
“There’s probably some other high-cost operations that the company has around the globe that would be looked at before Kwinana.”
Construction, Forestry Mining and Energy Union mining secretary Gary Wood said the review would place an enormous amount of stress on employees and their families.
About 4,000 people work at Alcoa operations in WA, including three alumina refineries at Kwinana, Pinjarra and Wagerup and the Huntly and Willowdale bauxite mines south of Perth.
Alcoa’s junior partner in Australia, Alumina, said the review does not include the Portland smelter in Victoria, where more than 700 people are employed.
Alcoa also operates the Anglesea coal mine and power station in Victoria.
Alcoa’s Global Primary Products president Bob Wilt said the review could affect 14 per cent of the company’s global smelting capacity and 16 per cent of its refining capacity.
“We’ll take action only after a thorough strategic review to determine the best outcome for our shareholders,” Mr Wilt said in a statement.
An Alcoa Australia spokesman was unable to specify which local operations would be affected but said the three WA refineries were “generally at the low end of the cost curve”.
Fat Prophets Resources analyst David Lennox said Alcoa’s high-cost operations and middle management would be in the spotlight as part of the review, but the company would be somewhat insulated by higher aluminium prices.
“They would know the pecking order of their smelters as to their costs and the potential to recapitalise any of them to bring them into line with modern practices in the sector,” he said.