ALCOA WORKERS APPROVE THE AGREEMENT TO INITIATE THE CESSATION OF ACTIVITY

Alcoa workers in San Cibrao (Cervo, Lugo) have approved in referendum the agreement to start the process of cessation of primary aluminum production and subsequent restart. The agreement was supported by 69.68% of the workforce, whose participation reached 76% of the 1,063 workers registered.

The agreement, which was signed on December 29, 2021, calls for a two-year reduction of the smelter’s 228,000 metric tons of annual capacity, and a commitment by the Company to begin restarting the smelter in January 2024.

“With this agreement, we now have a path to resolve the significant challenges the facility has faced and can begin building a stronger smelter in two years,” says Alcoa president and CEO Roy Harvey. “This has been a challenging journey for all involved, and we look forward to the future, working constructively with our employees and stakeholders to implement the agreement we reached,” he adds.

According to the multinational, the reduction activities will begin on 1 January 2022, with the aim of being completed by the end of January 2022. During the reduction period, Alcoa will seek to secure long-term power purchase agreements as soon as possible, starting in 2024. As part of the agreement, the workers will immediately cease a strike that has affected both the aluminium smelter and the alumina refinery.

In addition, the company has committed to provide employees with full wages and benefits during the two-year curtailment period, to extend contractor contracts through 2024, and to provide a new collective bargaining agreement that includes wage increases extending through the end of 2025. It has also committed that no collective redundancies will be considered for the San Ciprián smelter until 31 December 2025 at the earliest.

Alcoa expects the San Ciprian aluminium plant to record an annual net loss before taxes of approximately 20 to 25 million in 2022, based on current market prices. In 2021, the aluminum plant is projected to record a pre-tax net loss of approximately $65 million, with most of the impact in the fourth quarter based on higher energy prices. The average price of energy in the spot market for the month to date of December 2021 in Spain is $276 per megawatt hour.

The company’s offer includes an investment of more than 90 million euros for “the future viability and growth of the plant”, including the restart of the electrolysis tanks in 2024 after a two-year stoppage, and as a guarantee a restricted deposit will be constituted for the same amount.

As for the plan for the years 2022 and 2023, Alcoa offers guaranteed turnover for the auxiliary companies during the first two years, with guaranteed contracts for three years (2022 to 2024) for those external companies directly affected by the temporary cessation. In addition, preference in contracting will be given to local supply companies and transporters. In addition, the multinational is committed to working with eight energy suppliers with whom it is already in contact, to reach medium and long-term agreements that would come into force from 2024 and would be valid for 10 years.