Large Industrial Facility on Deep Water Port to Close
16 Dec 2019
Point Comfort Refinery in Texas to Permanently Close
Monday, December 16, 2019 4:10 pm EST https://news.alcoa.com/press-release/point-comfort-refinery-texas-permanently-close
"We operate one of the world’s largest alumina refining systems, and we are committed to maintaining our strong, first-quartile position"
PITTSBURGH--(BUSINESS WIRE)--Alcoa Corporation, a global leader in bauxite, alumina, and aluminum products, today announced that it will permanently close its Point Comfort alumina refinery in Texas.
The site’s 2.3 million metric tons of annual alumina capacity has been fully curtailed since June of 2016. In October of 2019, Alcoa announced that it was conducting a review of its global production capacities to drive lower costs and sustainable profitability. The review includes 4 million metric tons of alumina capacity, or approximately 27 percent of the Company’s total global refining capacity.
“We operate one of the world’s largest alumina refining systems, and we are committed to maintaining our strong, first-quartile position,” said Alcoa President and Chief Executive Officer Roy Harvey. “While this decision is difficult because of the long history of operations in Point Comfort, we must eliminate unprofitable capacity and continue to improve our Company for the long term.”
The Point Comfort refinery is a part of Alcoa World Alumina and Chemicals (AWAC), a group of companies owned 60 percent by Alcoa and 40 percent by Alumina Limited.
Alcoa will record restructuring charges in the fourth quarter 2019 of approximately $175 million (after-tax and noncontrolling interest), or $0.94 per share, related to the permanent closure. Alcoa’s share of related cash outlays is approximately $115 million with the majority to be spent in the next five years ($25 million expected in 2020).
Beginning in 2020, the closure is expected to result in annual net income improvement of approximately $15 million (after-tax and noncontrolling interest) and cash savings of approximately $10 million (Alcoa’s share) when compared to the ongoing spend for curtailment, exclusive of closure costs.
Point Comfort’s current employment of approximately 45 will be reduced as part of the closure, with any remaining personnel managing the demolition, decommissioning and remediation activities to prepare the location for potential redevelopment opportunities.
The AWAC partnership agreements between Alcoa and Alumina Limited provide for an allocation of certain liabilities occurring before AWAC’s formation on January 1, 1995, according to the party’s preformation ownership interest. While Alcoa and Alumina Limited are currently in the process of allocating AWAC’s Point Comfort-related costs and liabilities in accordance with those provisions, the recorded charges represent Alcoa’s current view of the liabilities.
Alcoa (NYSE: AA) is a global industry leader in bauxite, alumina, and aluminum products, and is built on a foundation of strong values and operating excellence dating back more than 130 years to the world-changing discovery that made aluminum an affordable and vital part of modern life. Since developing the aluminum industry, and throughout our history, our talented Alcoans have followed on with breakthrough innovations and best practices that have led to efficiency, safety, sustainability, and stronger communities wherever we operate. Visit us online on www.alcoa.com, follow @Alcoa on Twitter, and on Facebook at www.facebook.com/Alcoa.
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