Kurri Kurri plant permanently closed

Kurri Kurri plant permanently closed

Norway's Norsk Hydro said Thursday it would permanently shut down its Kurri Kurri aluminium plant in Australia, two years after production there was first shut down, as prices remain stubbornly low.

When the company shut down production at the plant in 2012 it cited a weak market, an uncertain economic outlook and a strong Australian dollar relative to the US dollar, which hurt profitability.

Norsk Hydro's competitor Alcoa announced earlier this year that it would close its Point Henry aluminium smelter in Australia, as it had no prospect of becoming financially viable. Rusal, the world's largest aluminium maker by volume, cut its 2013 production 8 per cent to 3.9 million tons.

Before the shutdown in 2012, the Kurri Kurri plant in New South Wales employed around 500 people, with a total annual production capacity of 180,000 metric tons, Norsk Hydro said.

The Norwegian company has previously curtailed capacity at several other plants, including 50,000 tons at Sunndal and 80,000 tons at Søral, both in Norway, and 80,000 tons at the German Neuss plant.

The problem is the price of raw aluminium on world markets, which despite artificial shortages created by warehouses stockpiling supply, has been stuck under $US2,000 a ton. In the first quarter, Norsk Hydro received on average $US1,749 a ton for its production.

aluminium prices must be around $US2,000 a ton for most smelters to be profitable. The price has been dropping since a peak of $US2,670 a ton in April 2011.

Norsk Hydro said in its first-quarter report that closures and production curtailments were offsetting planned start-ups, and that it expects global aluminium demand to exceed production in 2014.

Norsk Hydro said the costs of permanently closing down Kurri Kurri were expected to be offset by the sale of land and equipment.