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Alcoa Plans Partial Restart of Warrick Aluminum Smelter

Alcoa Warrick aluminum smelter

Alcoa Corporation plans to restart three of five potlines at its Warrick Operations aluminum smelter near Evansville, IN, which had been previously closed in March 2016. The remaining two potlines will be classified as curtailed capacity and will remain idle.

The three restarted potlines will directly supply the Warrick rolling mill, which serves the North American market with flat rolled aluminum for the food and beverage can packaging industry. The smelter’s molten metal will supplement purchased scrap metal and other raw materials that the site will continue to procure.

“By restarting a portion of the Warrick smelter, we will provide an efficient source of metal for the co-located rolling mill and help it meet an anticipated increase in production volumes,” said Tim Reyes, president of Alcoa’s Aluminum business unit. “The action will enable us to more fully utilize the assets at this integrated site for the benefit of our investors, customers, employees and the community.”

The Warrick location currently employs about 1,250. The restart will increase the site’s employment by approximately 275, including those who will be hired or recalled from layoff status. Some existing employees will transfer to the smelter.

The federal, state, and local governments have all been supportive of the restart plan. The state of Indiana, through the Indiana Economic Development Corp. (IEDC), and Warrick County offered preliminary assistance to support the restart plan. The IEDC offered Alcoa up to $2.4 million in conditional tax credits and up to $100,000 in training grants based on plans to add new full-time jobs for Indiana residents.

“With its decision to restart operations in Indiana, Alcoa is showcasing the value that this facility and Indiana’s manufacturing expertise provide to its global operations,” said Indiana Governor Eric J. Holcomb. “In Indiana, we’re witnessing incredible momentum as manufacturers continue to choose Indiana for growth, and we’re pleased that Alcoa once again chose Indiana.”

Alcoa Warrick Operations is comprised of the smelter and the rolling operations, which includes state-of-the-art casting, hot and cold rolling, slitting, and coating capabilities. The operations also include the power supply for the smelter and rolling operations, consisting of a coal mine that fuels four generating units with a combined net capacity of about 750 MW. Three of those units are wholly-owned by Alcoa Power Generating Inc. A fourth unit, Warrick Unit 4, with 300 MW of net capacity, is owned in a 50-50 partnership with Vectren, a utility headquartered in Evansville.

As part of the smelter restart plan, Alcoa Power Generating and Vectren have agreed to jointly own and operate Unit 4 through December 31, 2023. Vectren’s support in the restart decision provides important clarity for the power portfolio at Warrick.

The process to restart the three lines, with 161,400 tonnes of annual capacity, will begin immediately and is expected to be completed in the second quarter of 2018. Restart expenses through the end of 2017 are estimated to be between $30 and $35 million (after-tax).

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