Fate of Geelong smelter still in doubt

 

 

Alumina's joint-venture partner, Alcoa, last month announced that their AWAC business could close Point Henry, near Geelong, one of its two Australian aluminium smelters, in the face of continuing difficult conditions for the industry around the world.

 

 

Alumina said in its annual report on Thursday that its goal was for a profitable operation of the Geelong facility but that curtailment remained a possible outcome.

 

 

AWAC's review of Point Henry is expected to be completed by about mid-year.

 

 

Alumina said the smelter was unprofitable because of low prices for its products, higher costs for inputs, and the strength of the Australian dollar.

 

 

Those factors on Thursday prompted ratings agency Standard & Poor's to place Alumina's BBB long-term corporate credit and issue ratings on CreditWatch with negative implications.

 

 

"The supply side of the industry is being seriously affected by negative economics and disruptions, not demand contraction," Alumina said in its annual report.

 

 

"Pricing for aluminium has recovered marginally from its low point, however remains subdued."

 

 

Alumina said the medium-term outlook for aluminium was positive, with global demand expected to continue to grow by between five per cent to seven per cent this year.

 

 

Alumina shares inched one cent lower to $1.20 - almost half the price they were this time last year.