Alcoa’s Australian partner Alumina Ltd plans to keep its three West Australian refineries open as it looks for $150 million in cost savings amid worldwide refinery closures.
Alumina Ltd posted a $US88.3 million ($A122.53 million) full-year net profit after paying for a range of restructuring costs related to shutting down capacity in its Alcoa World Alumina and Chemicals (AWAC) joint venture with metals giant Alcoa.
US-based Alcoa has been reviewing its global smelting and refining capacity since March 2015 as it looks to cut costs.
Alumina hopes to save about $US12 million in labour costs at its West Australian operations but chief executive Peter Wasow was unable to say how many jobs could be lost.
“I can’t give you any indication of how that’s going to play out at any particular refinery,” Mr Wasow told AAP.
“Labour’s a pretty small component of the overall total costs.”
About two-thirds of the $US150 million savings in Western Australia would come from procurement, cutting raw material costs, lower energy prices, lower transportation costs, reduced maintenance and contractor services.
Also, about one-third of the WA savings would come from a combination of labour productivity, operating performance, improving yield, throughput and reducing the head office.
“At the moment a great proportion of the world’s production is under water but we’re still making profits,” Mr Wasow said.
The Australian operations include bauxite mines, three alumina refineries in Western Australia and an aluminium smelter, together employing around 5,000 people.
Mr Wasow said alumina supply growth had overshot demand in 2015, but the current market price was unsustainable.
“We believe some recovery in alumina prices is likely this year but many uncertainties remain,” he said.
He predicts the alumina market will be tighter in 2016 compared with the “more challenged” aluminium market.
Mr Wasow also expects more consolidation in the industry as smaller and higher cost refiners struggle.
Alumina’s financial result was dragged down by $US170 million in charges, which included impairments against its Portland smelter and Anglesea power station, both in Victoria, and Point Comfort refinery in Texas.
The company will pay a fully franked final dividend of 1.8 US cents, compared with 1.6 US cents a year ago.
Alumina is a 40 per cent partner in the global aluminium giant’s AWAC business, which includes its Australian interests.
Alumina shares were 2.5 cents, or 1.99 per cent, higher at $1.28.
ALUMINA INCREASES DIVIDEND
* Full year profit of $US88.3m, from $98.3m loss
* Revenue of $US0.1m unchanged
* Final dividend up to 1.8 US cents