Alcoa Corp.’s top executive is doubling down on his company’s promise to not add new aluminum capacity, indicating the world shouldn’t rely on the largest U.S. aluminum producer to help ease supply pains.
Chief Executive Officer Roy Harvey said Tuesday that Alcoa has no plans to add capacity by building or adding aluminum smelters. His words reiterate a position made by the Pittsburgh-based company in November, which vowed to only build low-emission mills using technology from a venture dubbed Elysis.
“We choose not to invest in conventional technology -- that brownfield or greenfield capacity,” Harvey said during a BMO Capital Markets conference in Florida. “We’re just not going to do it because by the time you design and start to construct, Elysis as a package will be ready to go.”
Harvey’s comments are significant given aluminum’s surge to an all-time high on Monday as Russia’s invasion of Ukraine compounds ongoing global shortages of the industrial metal used in goods ranging from autos and airplanes to appliances and packaging. Century Aluminum Co., the second-largest U.S. producer, later in the day left open the possibility of adding capacity.
Elysis is a joint venture between Alcoa and Rio Tinto Group that developed technology to make aluminum with production methods that don’t emit carbon dioxide. Alcoa has said it expects the project will produce at commercial scale in a few years, and vowed in November that any new capacity would only be built using this technology.
Century’s Chief Executive Officer Jesse Gary said that the company could use cash to restart potlines at two of its smelters, which would total about 100,000 tons of production. Gary made it clear this is one of the options the company has with the extra cash it has on hand amid the aluminum price boom. Shares rose 12% on Tuesday in New York.
Shares of Alcoa surged as much as 14% and closed 5.9% higher at $79.78, while benchmark aluminum prices in London gained 3.3%. The global market swung to a 1.9 million-ton deficit last year, according to the World Bureau of Metal Statistics.
Harvey said Russia’s invasion of Ukraine has no direct impact on Alcoa’s business, though the war will impact the global supply of alumina, a key aluminum-making ingredient. As sanctions against Russia increase, the CEO also said Alcoa is assessing what to do about its aluminum sales to Russian companies.
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