Alcoa 2013 Annual Report Download - page 78

primarily consumed by Alcoa’s smelter in Tennessee, which was temporarily idled in 2009 and permanently shut down in
2011. Since 2009, the power generated from Tapoco was sold into the open market.
At December 31, 2013, Alcoa had 655 kmt of idle capacity on a base capacity of 4,037 kmt. In 2013, idle capacity
increased 64 kmt compared to 2012 mostly due to the temporary curtailment of 131 kmt combined at two smelters in
Brazil, partially offset by the permanent closure of the Fusina smelter in Italy (44 kmt-per-year) and the restart of a
portion (27 kmt combined) of the capacity that was temporary curtailed in 2012 related to the Avilés and La Coruña
smelters in Spain. Base capacity declined 190 kmt between December 31, 2013 and 2012 due to the permanent closure
of three potlines combined at smelters in Canada and in the U.S. and the previously mentioned permanent shutdown of
the Fusina smelter. A detailed description of each of these actions follows.
The restarts in Spain occurred in order to meet the requirements of the modified interruptibility regime in the Spanish
power market. In December 2012, the Spanish Government issued a Ministerial Order that modified the interruptibility
regime previously in place in the Spanish power market. The interruptibility regime allows certain industrial customers
who are willing to be subject to temporary interruptions in the supply of power to sell interruption rights to the high
voltage transmission system operator. In January 2013, Alcoa applied for and was granted rights to sell interruption
services under the modified regime from its San Ciprian, Avilés, and La Coruña smelters in Spain. The commitment is
taken for a one-year period, which has since been extended until October 2014. In 2013, the Spanish Government
notified the European Commission of the modification in the interruptibility regime for review under European state
aid rules.
In May 2013, Alcoa announced that management will review 460 kmt of smelting capacity over a 15-month period for
possible curtailment. This review is aimed at maintaining Alcoa’s competitiveness despite falling aluminum prices and
will focus on the highest-cost smelting capacity and those plants that have long-term risk due to factors such as energy
costs or regulatory uncertainty.
As part of this review, also in May 2013, management approved the permanent shutdown and demolition of two
potlines (105 kmt-per-year) that utilize Soderberg technology at the Baie Comeau smelter in Quebec, Canada.
Additionally, in August 2013, management approved the permanent shutdown and demolition of one potline (41 kmt-
per-year) that utilizes Soderberg technology at the Massena East, NY plant. The shutdown of these three lines was
completed by the end of September 2013. The Baie Comeau smelter has a remaining capacity of 280 kmt-per-year
composed of two prebake potlines and the Massena East smelter has a remaining capacity of 84 kmt-per-year
composed of two Soderberg potlines.
Also in August 2013 as part of this review, management initiated the temporary curtailment of 97 kmt at the São Luís
smelter and 31 kmt at the Poços de Caldas smelter, both in Brazil. This action was also completed by the end of
September 2013. An additional 3 kmt was temporarily curtailed at the Poços de Caldas smelter by the end of 2013.
The remaining 183 kmt of smelting capacity subject to this review is expected to be completed during the first half of
2014 (see 2014 outlook below).
In June 2013, management decided to permanently close the Fusina smelter as the underlying conditions that led to the
idling of the smelter in 2010 have not fundamentally changed, including low aluminum prices and the lack of an
economically viable, long-term power solution.
At December 31, 2012, Alcoa had 591 kmt of idle capacity on a base capacity of 4,227 kmt. In 2012, idle capacity
decreased 53 kmt compared to 2011 due to the permanent shutdown of the smelter in Tennessee (215 kmt-per-year)
and two potlines at the smelter located in Rockdale, TX (76 kmt-per-year), mostly offset by the curtailment of the
Portovesme smelter in Italy (150 kmt-per-year) and the temporary curtailment of a portion of the smelters in Spain:
Avilés (46 kmt out of 93 kmt-per-year) and La Coruña (44 kmt out of 87 kmt-per-year). Base capacity declined
291 kmt between December 31, 2012 and 2011 due to the previously mentioned permanent shutdowns.
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