Due to high production costs and poor market conditions, Alcoa (AA-N), the world’s largest producer of aluminum, has announced that it will close its Northwest Alloys magnesium smelter.
The move will result in 300 of 325 workers being laid off at the Addy operation in Washington. The layoffs will run from Oct. 1 to Dec. 31.
The smelter has been running at two-thirds capacity this year, processing 30,000 metric tonnes of magnesium per year. The product is used in metal-manufacturing processes.
The smelter is one of several which have been shut down, or seen reduced production, due to high electricity prices in the northwestern U.S. Over the past few months, Alcoa has idled aluminum smelting capacity at Northwest and sold back electricity to the local public utility.
The company says it plans to source its North American requirements through contracts with a number of worldwide suppliers.
Not all big power users in the northwest are unhappy about rising electricity costs. Across theborder in British Columbia, Cominco (CLT-T) has turned a tidy profit on the sale of electricity from the Waneta hydroelectric dam on the Pend Oreille River, which supplies the Trail zinc smelter.
Several times this year, Cominco has increased its curtailment of zinc production in order to sell power. The company expects to cut production by as much as 100,000 tons. A big chunk of that will come during August and September, when the smelter will be closed for maintenance.
So far, Cominco’s move to more power sales has not resulted in any layoffs as production curtailments have been worked around the employees’ vacation time.
On the New York Stock Exchange on Friday, Alcoa shares were off US43, or 1.1%, at US$39.25 each.
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