Alcoa Inc (NYSE:AA) announced that it will shut down operations at the Suriname refinery due to the decreasing supply of bauxite.
The company has been struggling to maintain its operational capacity, and the low supply is taking a toll on the firm’s performance. According to Alcoa Inc.’s Global Primary Products’ President Bob Wilt, the increasingly unfavorable markets are making it hard for the firm to maintain operations. The company’s share performance has also been affected. Shares dropped yesterday from 1.61% to $9.49.
To avoid further losses, the company has decided that halting the operations at the Suralco refinery in Suriname is a good call. The firm will terminate the operations by November 30. It is not clear whether the refinery will be reopened in the future once the company and the economy are back on track. Alcoa has been limiting its refining capacity as aluminium prices remain low. The firm has been placing more focus on automotive and aerospace products.
The Suralco refinery receives an annual refining supply of 2.2 million metric tons. The company had to restrict the capacity to 443,000 metric tons in addition to the 876,000 tonnes that had already been kept aside. The company has been holding talks with the Suriname government since October 2014 to discuss the way forward following the sensitive nature of the situation.
Alcoa Inc (NYSE:AA) is currently facing restructuring charges that analysts have estimated to be between $65 million to $75 million. In terms of shares, the charges translate to 5 cents to 6 cents per share. The company’s head offices are based in New York. Alcoa deals with fabricated aluminium, primary aluminium and alumina worldwide.
Alcoa scored a C+ from TheStreet Ratings team. According to the team, the company has its strengths and weaknesses, and there is not much evidence to support a positive or negative performance. The revenues have been on an upward trend and so have been the returns on equity. However, the cash flow has been decreasing.