Alcoa’s Australian partner Alumina has slumped to a full year loss due to restructuring-related write-offs and lower prices and volumes.
The miner and metals producer made a loss of $US30.2 million ($A39.3 million) in 2016, down from a $US88.3 million ($A114.8 million) profit in 2015.
The weaker result was attributed to its share of impairment charges related to shutting down capacity in its Alcoa World Alumina and Chemicals (AWAC) joint venture with metals giant Alcoa.
Alumina holds a 40 per cent stake in AWAC, and its share of those charges was $US115 million, partially offset by gains on the sale of the Dampier-Bunbury gas pipeline.
“Net cash distributions from AWAC were higher than the previous year despite the tough market conditions in the first half,” chief executive Peter Wasow said.
“As a result of restructuring and productivity gains AWAC continues to keep cost of production low and prices have recovered significantly.”
The AWAC joint venture also reported a fall in alumina margins because of lower prices in the first half of the year, and lower volumes after curtailing capacity across its refineries.
This was partly offset by increased sales of bauxite ore to third parties, a business that AWAC is looking to expand.
The two joint venture partners have shut more than three million tonnes of refinery capacity globally in the past two years amid a prolonged downturn in prices, but have spared their three alumina refineries in Western Australia.
Alcoa in November completed a split of its global operations into two independent, publicly traded companies, with one focused on upstream mining and smelting and the other on aluminium products, as part of efforts to tackle the price and demand slump.
The split was able to proceed after the two partners settled a dispute and agreed to reshape their joint venture, allowing greater say to the Australian company.
The company expects a steady improvement in alumina prices in 2017 as demand and supply growth remains largely in balance. However, cost pressures are expected to continue, Mr Wasow said.
He expects to increase bauxite sales to third parties during the year.
Alumina shares were down four cents, or two per cent, at $1.93 at 1340 AEDT.
RESTRUCTURING CONTRIBUTES TO ALUMINA’S LOSS
* Full year net loss of $US30.2m vs $US88.3m net profit
* Final dividend up 1.3 US cents to 3.1 US cents