Alcoa’s San Cibrao Complex Faces Uncertain Future Amidst Energy Cost Challenges
Alcoa, the American multinational, has reiterated its position that the aluminum and alumina production complex at San Cibrao in Spain remains unfeasible under current and projected energy market conditions. Despite its efforts to find a buyer for the facility, the company has been clear in its communications that the complex is not profitable, and is unlikely to become so if energy prices persist at current levels.
Alcoa's Chairman and CEO, Bill Oplinguer, addressed the situation in the company's recent half-yearly report filed with the U.S. Securities and Exchange Commission (SEC). The report emphasizes that while the company is actively seeking a buyer for the primary aluminum factory and alumina refinery, both operations have faced substantial financial losses in recent years. These losses have been covered by internal credit lines, which are nearing their limits, leaving the San Cibrao complex with only about $100 million in available financing.
The company began the sale process for the A Mariña complex in the first quarter of 2024 and expects to conclude it by the year's end. However, Alcoa has warned that unless a viable financial solution or successful sale is achieved, the San Cibrao operations are projected to continue incurring losses throughout 2024. Alcoa has also indicated that it will not provide further funding beyond the current resources, potentially leading to difficult decisions about the future of the complex.
Although the company recently acquired full ownership of Alumina Limited, its partner in the Lugo refinery and other assets, Alcoa's financial performance improved in the second quarter of the year, posting a consolidated net profit of $20 million. This contrasts with a $252 million loss in the first quarter and a $102 million deficit in the same period last year.
Alcoa's statement reflects the challenging environment faced by the San Cibrao operations, highlighting the impact of energy costs on profitability and the urgency of finding a sustainable path forward for the complex.
