Alcoa 1998 Annual Report Download - page 32

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1,896 1,909 1,940 2,036
2,584
655 673
901 920
2,956
1,367
2,551 2,582
2,841
3,951
Ingot
Fabricated Products
Aluminum Product Shipments
thousands of metric tons
94 95 96 97 98
94 95 96 97 98
64
81
73 75
67
Average Realized Ingot Price
cents per pound
30
I. Alumina and Chemicals
1998 1997 1996
Third-party alumina shipments (mt) 7,130 7,223 6,406
Third-party sales $1,847 $1,978 $1,963
Intersegment sales 832 634 617
After-tax operating income 318 302 340
This segment’s activities include the mining of bauxite, which is
then refined into alumina. The alumina is then sold to internal
and external customers worldwide or is processed into industrial
chemical products. Approximately two-thirds of the third-party
sales from this segment are derived from alumina. In 1998, third-
party sales of alumina fell 14% from 1997, as realized prices fell
13% and shipments fell 1%. Lower third-party shipments, as well as
higher intersegment sales in 1998, were a direct result of the
Alumax acquisition. Previously, sales of alumina to Alumax were
classified as third-party revenues; these sales are now recorded as
intersegment. Including intersegment sales, shipments were up
in 1998. Third-party revenues from alumina in 1997 were 5% higher
than 1996, as a 13% increase in shipments was partially offset by
lower realized prices.
Third-party sales of alumina-based chemical products were
unchanged compared with 1997, as higher shipments, aided by
acquisitions, were offset by lower prices. In 1997, third-party sales
from these products fell 3% from 1996, as lower volumes offset
higher realized prices.
Despite lower prices, segment
ATOI
in 1998 rose 5% over 1997.
Lower operating costs and the impact of the Inespal acquisition
were partly offset by lower realized prices. In 1997,
ATOI
was $302,
down 11% from 1996. The decrease was the result of lower earnings
from alumina operations, which were negatively impacted by lower
realized prices. The effect of lower alumina prices was partially
offset by lower labor costs, improved productivity and improved
results from Alcoa’s chemicals operations.
In 1997, Alcoa World Alumina and Chemicals
(AWAC)
received
an advance payment of $240 related to a long-term alumina supply
contract with Sino Mining Alumina Ltd
(SMAL)
. The contract
entitles
SMAL
to purchase 400,000 mt of alumina per year for
thirty years.
SMAL
has the option to increase its alumina purchases
as its needs grow. Per-ton payments also are made under the
terms of the agreement.
In 1997,
AWAC
announced a 440,000 mt expansion of its Wagerup
alumina refinery in Western Australia. Construction is expected
to be complete in the 1999 second quarter.
II. Primary Metals
1998 1997 1996
Third-party aluminum shipments (mt) 1,392 940 976
Third-party sales $2,105 $1,600 $1,580
Intersegment sales 2,283 1,966 1,900
After-tax operating income 331 417 313
This group’s focus is Alcoa’s worldwide smelter system. Primary
metals receives alumina from the alumina and chemicals segment