NEW YORK (TheStreet) -- Aluminum producer Alcoa (AA) announced it will close its Point Henry smelter and two rolling mills in Australia after a two-year review proved they wouldn't return to profitability.
The smelter was placed under strategic review in February 2012 amid challenging conditions for the industry. The two-year review found the 50-year-old smelter had "no prospect of becoming financially viable."
Meanwhile, the rolling mills which serve Australian and Asian can sheet markets have been undercut recently by a surplus from Chinese producers.
The three facilities employ just under 1,000 people combined."We recognize how deeply this decision impacts employees at the affected facilities and are committed to supporting them through this transition," said CEO Klaus Kleinfeld in a statement. "Despite the hard work of the local teams, these assets are no longer competitive and are not financially sustainable today or into the future." Restructuring-related charges over fiscal 2014 are expected between $250 million and $270 million, or 22 cents to 25 cents a share, of which 60% will likely be recorded in the first quarter. The closures will reduce the company's smelting capacity by 190,000 metric tons, around 10% of Australia's total annual output, and reduce can sheet capacity by 200,000 metric tons. The Geelong, Vic.-based smelter will close in August and the two rolling mills will shutter by the end of 2014. By late afternoon, shares had edged 0.09% higher to $11.38.
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