Alcoa plans to reopen San Ciprián smelter in Spain

Alcoa has formulated a plan for the future of its San Ciprián, Spain aluminium complex.

It has entered into a joint venture (JV) with Ignis Equity Holdings to support the smelter’s operations.

Alcoa will own a 75% interest and continue as the managing operator and Ignis a 25% interest. Alcoa and Ignis contributed $81 (€75) million and $27 (€25) million, respectively, to form the JV and fund the operations.

Additionally, up to $108 (€100) million may be funded by Alcoa as needed for operations with a priority position in future cash returns. Further funding requires agreement by both partners and the funding would be shared 75% by Alcoa and 25% by Ignis.

Alco said the JV allows for the planned restart of the San Ciprián smelter in 2025, a commitment made within the Viability Agreement signed between Alcoa and the employees when the smelter was stopped in 2021 due to high energy costs.

Work to support the restart was underway prior to the JV agreement.

In 2024, the San Ciprián smelter recorded a net loss (pre-tax) of approximately $50 million and negative cash from operations of approximately $60 million.

Net cash outlays in 2024 covered employee compensation and holding costs while the smelter was fully curtailed, and limited production volumes from the casthouse to meet customer commitments.

Based on recent pricing, the company expects to record a net loss (pre-tax and noncontrolling interest) for the smelter of approximately $80 million to $100 million in 2025.

Capital expenditures required to restart the smelter’s will be $10 million.