Alcoa’s Kwinana Alumina Refinery to be shutdown, 750 of 800 jobs to be cut, company announces

A major refinery employing hundreds of Aussies will be shut down and its 800-strong workforce will be reduced to about 50.

A major West Australian refinery employing hundreds of people will be shut down, with its workforce to be reduced by almost 94 per cent to 50 people.

US mining giant Alcoa Corporation on Tuesday announced it would fully curtail production in 2024 at its Kwinana Alumina Refinery south of Perth, with the process beginning in the second quarter.

The company has operated in WA for about 60 years.

550 of the 800 jobs at the refinery would be cut by third quarter of this year, when all alumina production will cease.

But certain processes will continue until about the third quarter of 2025 – further reducing employee numbers to about 50, the company said in a statement.

It is understood a further 250 contractors at the site will also be impacted.

Hundreds of jobs at Alcoa’s Kwinana Aluminium Refinery in WA will be cut by the third quarter of 2024, the company announced in a statement. Picture: Supplied

The company’s Kwinana refinery has an annual nameplate production capacity of 2.2m metric tonnes.

But it has only been operating at about 80 per cent of its nameplate capacity since January this year.

Matt Reed, Alcoa’s Executive Vice President and Chief Operations Officer, said the decision was based on the refinery’s age, scale, operating costs and current bauxite grades.

He also cited market conditions as a reason for the phased shutdown.

“Today’s curtailment decision comes only after thorough and careful deliberation, and we acknowledge that this action will impact workers, business partners, and the community,” Mr Reed said.

“We deeply appreciate the commitment and support of our many loyal employees, contractors, and suppliers at our Kwinana refinery, which has made a major contribution to Western Australia’s economic development over the last 60 years of continual operation.”

WA Premier Roger Cook responded to the “disappointing” decision by stating Alcoa needed to do “everything it can to support its workforce through this transition”.

“My Government will step up to provide supports for local workers to retrain, reskill and look for new career opportunities in the local area,” Mr Cook said.

Alcoa has said it will work closely with affected employees to support them with transitioning to “other opportunities”. Picture: Supplied

“Kwinana is the industrial heart of Perth, and has a bright future with new job-creating industrial projects emerging on the strip - keeping Kwinana strong for generations to come.

“We will continue to work with Alcoa to ensure its other operations in Western Australia - including its Pinjarra and Wagerup refineries - support local jobs into the future.”

Mr Reed said the company would work closely with employees “to provide support with transitioning to other opportunities”.

“This includes potential redeployment within our business or assistance to facilitate employment at other workplaces,” he said.

In a statement Alcoa said the refinery and associated residue storage facilities will continue to be actively managed.

The Kwinana refinery’s port facilities will continue to import raw materials and export alumina produced at the Pinjarra Alumina Refinery.

“Production at the Pinjarra and Wagerup refineries is not expected to be impacted by the curtailment at Kwinana,” the company’s statement reads.

Alcoa’s Kwinana refinery recorded a net loss (pre-tax and noncontrolling interest) of approximately $130m million last year.

The refinery will continue to incur approximately $40m of non-cash depreciation, depletion and amortization expenses while curtailed, the company said in their statement.

“(Alcoa) expects annual improvements of approximately $70 million beginning in the third quarter of 2024 as a result of the curtailment,” the statement reads.

WA Premier Roger Cook has branded the decision as “disappointing”. Picture: NCA NewsWire / Kelly Barnes

WA Liberal leader Libby Mettam called the closure “an indictment” on the state Labor government.

She claimed “torturous” environmental approval processes and energy supply issues had played a part in the decision.

“Alcoa understands its obligations to the environmental approval process and has a long history of compliance,” Ms Mettam said.

“However the Cook Government has made a career of delaying and complicating the process, locking Alcoa out of accessing higher grade ores, without which the business is not viable.

“This a very shabby way to treat a company that has been operating environmentally safely and employing thousands of Western Australians for 60 years.”

Alcoa expects to record restructuring charges between $180 and $200m in the first quarter of 2024, related to the Kwinana refinery’s curtailment.

The charges include approximately $81m for water management costs, $55m for employee related costs, $26m for asset retirement obligations and $18m of other costs.

The company’s share (after-tax and noncontrolling interest) will be between $76m and $84m, or $0.42 to $0.47 per share.

“Alcoa’s share of related cash outlays of approximately $115m (which includes existing employee related liabilities and asset retirement obligations) is expected to be spent in 2024 ($80m) and 2025 ($35m),” the company’s statement reads.

Originally published as Alcoa’s Kwinana Alumina Refinery to be shutdown, 750 of 800 jobs to be cut, company announces