The future of Alcoa's Kwinana refinery is in limbo, with the alumina producer refusing to shut down speculation that the facility is facing imminent closure just weeks after its US parent company appointed a Perth-based COO.
The future of Alcoa’s Kwinana refinery is in limbo, with the alumina producer refusing to shut down speculation that the facility is facing imminent closure just weeks after its US parent company appointed a Perth-based chief operating officer.
US-based Alcoa Corporation, which owns the Australian business alongside ASX-listed Alumina as part of the Alcoa World Alumina and Chemicals joint venture, has repeatedly highlighted its concerns about the future of the plant at Kwinana.
In October, incoming chief executive William Oplinger labelled the operation ‘marginal’ when announcing a restructure that claimed 90 local jobs.
At the time, Pittsburgh-based Mr Oplinger said the company was “looking at a variety of different levers that could be pulled to drive cost down and improve profitability” at Kwinana.
“Ultimately, as with any marginal asset, and Kwinana is a marginal asset at this point, we’ll consider options on the table, including curtailment and closure,” he said.
The comments were rebuked by Member for Kwinana and Premier, Roger Cook, who labelled them disappointing and said the government’s advice was that there was no plan for closure.
In response to unconfirmed reports out today that the 60-year-old facility is about to be closed, a spokesperson for Alcoa referred Business News to Mr Oplinger's commentary.
“Kwinana alumina refinery faces a range of challenges as outlined by our CEO during our Q3 earnings update,” they said.
“We have nothing further to add.”
The Kwinana facility was conspicuously absent from commentary by Alumina chief executive Mike Ferraro around costs and emissions in a December operations update which referenced the JV's other WA refineries.
“AWAC remains one of the world’s leading producers of alumina," Mr Ferraro said.
"The Pinjarra and Wagerup refineries in WA remain first quartile on the global alumina refining cost curve and emissions curve and continue to generate strong cash flows."
A closure at Kwinana would have a significant impact on the local workforce, with about 900 employees and 300 contractors understood to be currently engaged.
It would come less than a month after former OZ Minerals executive, WA-based executive Matt Reed, was promoted to lead Alcoa’s global operations as a Perth-based chief operating officer, only six months after he entered the business as vice-president operations Australia.
Alcoa has faced a series of challenges around environmental approvals at its WA operations in recent times, with a full Environmental Protection Authority review hanging over its expansive Darling Range bauxite mining operations despite the EPA granting it a licence to continue mining there.
A full assessment of Alcoa's plans to expand its mining operations could take as long as two years, with the miner's exemption covering its work in the interim subject to strict conditions.
Alcoa operates three refineries in the state, at Kwinana, Pinjarra and Wagerup, where it turns locally mined bauxite ore into alumina.
The company's inability to expand its Darling Range mining footprint has meant it has been processing lower grade ore through its refineries in recent years.
Its two bauxite mines and three alumina refineries combine to produce around 50 per cent of the nation's alumina output.