Alcoa’s Struggle with San Cibrao Complex: Sale Looms Amid Financial Woes
Alcoa is facing significant challenges with its San Cibrao complex in Spain, as revealed in the company's latest report filed with the SEC. The multinational aluminum producer is urgently looking to offload this facility due to ongoing financial losses and diminishing internal credit lines, which are reported to have less than $100 million available. The situation has grown increasingly dire, with the complex incurring substantial losses during the first quarter of 2024 and in previous years.
The company has clearly stated that it is no longer willing to finance the losses at San Cibrao and expects available funds to run dry in the second half of the year. With the clock ticking, Alcoa has initiated a process to find a buyer for the facility, which includes both the aluminum and alumina plants. A call for non-binding offers is scheduled for May, with hopes to move to the binding phase by June.
However, the outlook for finding a buyer remains bleak. Alcoa reports that despite improvements in power purchase prices and selling prices during the first quarter, the complex remains economically unviable. The company has expressed skepticism regarding the likelihood of short-term government support, which it deems essential for any long-term solution, including the sale of the complex.
The works council has argued the necessity of a committed investment of about $100 million in the anode furnace to make the facility competitive and viable for a future owner. Yet, Alcoa’s filings indicate a cautious approach, with only $8 million disbursed in cash for operations in Lugo during the first quarter.
As the situation unfolds, the future of the San Cibrao complex hangs in the balance, with potential implications for the local economy and the broader aluminum market. Alcoa’s management has indicated that difficult decisions regarding the future of the complex will have to be considered if a sale does not materialize soon.
