Alcoa Shuts Down Warrick Potline Following Power Outage

Aluminum company Alcoa (NYSE:AA) has shut down one of three potlines that are part of its Warrick aluminum smelter restart. The move follows a temporary power outage at the plant, which is located near Evansville, Indiana.

Last July, the company announced it would systematically restart three out of five potlines it had shut down in 2016, bringing them back online and into the production fold. When the Warrick smelter was shuttered in 2016 it was the largest operating smelter in the US.

In the 2017 announcement about the smelter restart, Alcoa credited improved competitiveness as the motivation behind the move.

“By restarting a portion of the Warrick smelter, we will provide an efficient source of metal for the co-located rolling mill and help it meet an anticipated increase in production volumes,” Tim Reyes, president of Alcoa’s aluminum business unit, said at the time. “The action will enable us to more fully utilize the assets at this integrated site for the benefit of our investors, customers, employees and the community.”

Alcoa’s Warrick operation is the world’s largest producer of coated container sheet, and the only North American supplier of high-quality lithographic sheet. Warrick also produces aluminum sheet for beverage and food can end tabs, and other flat-rolled aluminum products, including lithographic sheet.

In addition, the facility is home to four coal-fired generating units with a combined net generating capacity of about 750 megawatts.

The effort to turn the potlines back on was to occur strategically, with the last components set to be restarted in the second quarter of this year; however, the recent power outage and subsequent shutdown of the potline has delayed the project’s completion.

The company spent roughly US$30 million during the second half of 2017 to bring the plant back online. Annual capacity for the the three potlines stands at 161,400 metric tons, and the affected potline accounts for 50,000 metric tons. There is no word when, or if, Alcoa will restart the third potline.

In other news, earlier this month, Alcoa announced a partnership with Rio Tinto (ASX:RIO,LSE:RIO,NYSE:RIO) and Apple (NASDAQ:AAPL) to develop the world’s first carbon-free aluminum-smelting plant.

The green plant will be located in Quebec, Canada and will strengthen the North American aluminum sector while offering viable environmentally friendly smelting options for the global industry.

“Today, our history of innovation continues as we take aluminum’s sustainable advantage to a new level with the potential to improve the carbon footprint of a range of products from cars to consumer electronics,” Alcoa President and CEO Roy Harvey said in a press release.

The price of aluminum sank midway through last week and then quickly rebounded, ending the week at US$1.036 a pound.

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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.