Alcoa Idling Italian Smelting Operations

Alcoa announced that it will temporarily idle production at its two aluminum smelters in Fusina and Portovesme, Italy. The curtailment is a result of uncertainty in obtaining future power supply for the smelters at competitive rates and the financial impact of the European Commission decision that Italy’s extension of the existing electricity tariff after 2005 did not comply with European Union state aid rules and that a portion of the benefit received by Alcoa must be refunded. Alcoa is appealing the decision.

“This is a dark day for European heavy industry. The EC is sending a signal to investors and workers that heavy industry is no longer a priority,” said Klaus Kleinfeld, president and CEO of Alcoa. “Particularly in today’s economic crisis, this decision is hard to understand. Skilled and long-term jobs will be lost, facilities will be closed, and companies in Europe will not be able to compete.”

The smelters are expected to be shuttered by the end of the year. Alcoa’s rolling mill in Fusina, which is adjacent to the smelter, is not directly impacted by this action.

The curtailments in Italy will bring Alcoa’s total global smelting system curtailments to about 24 percent.