Alcoa Corp. Declares Hefty $62 Million Payment, Potline Closure at Wenatchee Smelter Facility

The payment of $62.4 million and curtailment of one potline will lead to estimated charge of $73 million or $0.39 per share, which will be recorded in Q2 this year.

SEATTLE (Scrap Monster): Alcoa Corporation, a global leader in bauxite, alumina and aluminum products, announced that it will permanently close one of the four potlines at its fully curtailed Wenatchee, Washington smelter facility. Further, it has decided to make a payment amounting to $62.4 million to the Chelan Public Utility District (PUD) under a power sales agreement between both parties.

The Wenatchee Works Aluminum smelter was idled in 2015. The deadline for restart of the three potlines had expired on June 18^th. As per agreement, Alcoa had agreed to operate the plant by June 18^th or pay the deferred upfront charge of $62.4 million. The PUD commissioners had agreed to defer remaining payment, on Alcoa’s intent to restart the facility. This payment does not prevent the possibility of a future restart of the smelter facility. It must be noted that the contract is valid until 2028.

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The contract obligates Alcoa to purchase 26% of the electricity generated from the Rocky Reach and Rock Island hydropower projects for its Wenatchee smelter, which is sufficient enough to operate three potlines. As the smelter operations are idled, the PUD sells this power on behalf of Alcoa and adjusts the sale proceeds against Alcoa’s monthly contract costs.

The Line 3 potline, planned for permanent closure, has not been in operation since 2001. It has a production capacity of 38,000 metric tons per year. The other three potlines have a combined capacity of 146,000 metric tons per year and have been out of operation since 2015. The smelter had a fifth line which was permanently closed in 2004.

Steve Wright, PUD General Manager stated that the $62 million payment receipt amounts to less than its capital investment program of over $100 million per year. The money will be utilized towards implementing strategic priorities, Wright added.

The payment of $62.4 million and curtailment of one potline will lead to estimated charge of $73 million or $0.39 per share, which will be recorded in Q2 this year. The company's Q1 income had surged higher significantly to total $150 million.

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