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Alcoa to halt primary aluminium production in Spain for two years

reuters.com · 12/29/2021 12:53
Alcoa to halt primary aluminium production in Spain for two years

- Alcoa Corp AA reached a deal with workers to end primary aluminium production at its San Ciprian facility in Spain for two years, the Industry Ministry said on Wednesday, as soaring European energy prices pressure heavy electricity users.

Under the programme, supported by some 70% of workers, the U.S. metals producer will stop production of aluminium by electrolysis for two years, invest $103 million in the plant and will seek to renegotiate long-term energy supply contracts.

The company agreed to maintain salaries during the production halt and said it would not lay off any workers for the next four years. It will smelt scrap aluminium to guarantee supplies to some customers.

Industry Minister Reyes Maroto said in a statement the government supported the deal because it would avoid job losses and guarantee the plant receives the investment it needs to remain a going concern.

Alcoa has long sought to shut down the San Ciprian smelter in Spain's northwestern Galicia region, which has struggled to remain competitive in the face of high energy costs and low aluminium prices, leading to several years of losses.

The company did not immediately respond to a request for comment on the agreement.

It attempted to lay off some 500 workers last year but was forced to abandon the plan after a Spanish court declared it was "null and void".

Union representative Jose Antonio Zan said on Wednesday the proposal was the least bad option available but that a production halt would turn the plant into a silent tomb.

"Politicians need to explain how in the midst of a raw-materials crisis, Spain can stop producing such a vital material," he said shortly after the decision was announced.

(Reporting by Nathan Allen; editing by Barbara Lewis)

((n.allen@thomsonreuters.com; +34 617 792 131;))