Alcoa set to end 60 years of production at Kwinana alumina refinery

2024-01-10

Jan. 10, 2024 - Aluminium producer Alcoa will fully curtail production at its 2.2 t/y alumina refinery in the Kwinana Industrial Area in Western Austria (WA) this year, after 60 years of operation.

Matt Reed, chief operations officer and executive VP at Alcoa, said the decision was based on a variety of factors including age, scale, operating costs, current bauxite grades, and current market conditions.

It will see employees at the site phased down from around 800 at the start of 2024 to 250 by Q3, when all alumina production will cease. Alcoa said “certain processes” will continue until about Q3 of 2025, when the number of employees at the site will be further reduced to 50.

Alcoa said the refinery and associated residue storage facilities will continue to be actively managed. Also, the company’s port facilities, located alongside the refinery, will continue to operate and import raw materials and exports alumina at the company’s Pinjarra alumina refinery.

Reed said the company will support its employees in transitioning to other opportunities, either within the business or at other workplaces.

Alcoa made no mention of the specific impacts to around 300 contractors that work at the Kwinana refinery, but 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.”

He added that Alcoa remains committed to WA in the long-term and will continue to assess options for the refinery, monitoring the factors that led to this decision.

The news was “very disappointing” for workers said Steve McCartney, state secretary at the Australian Manufacturing Workers Union (AMWU). Despite a rumour about a production stop in the week prior to the announcement, McCartney said: "We didn't think it was going to be this quick, and that certain…it was a bit of a surprise to everybody.”

McCartney added that AMWU would focus on ensuring that workers had opportunities to transfer or upskill to other jobs.

The WA government is also set to provide support. WA premier Roger Cook, a Kwinana local, said: “Our Government will step up to provide support for local workers to retrain, reskill and look for new career opportunities in the local area. And we will continue to work with Alcoa to ensure its other operations in WA – including its Pinjarra and Wagerup refineries – support local jobs into the future.”

Alcoa does not expect the curtailment at Kwinana to impact production at its remaining Western Australian refineries, Pinjarra and Wagerup.

Australia’s federal minister for resources, Madeleine King, further assured that Alcoa’s decision will not affect Australia’s or Western Australia’s sovereign capacity in alumina production, or the broader supply chain of alumina, “which is essential for our future transition towards net zero emissions”.
Alcoa’s decision comes just a month after aluminium was added to Australia’s strategic minerals list. High purity alumina has been a part of the critical minerals list since 2022.

Despite King’s assurances about alumina, Alcoa’s decision comes amid a quickfire assault of disappointments in Australia’s resources sector.

As Alcoa announced the production end at Kwinana, nickel mining and exploration company Panoramic Resources revealed that it was suspending operations at its Savannah nickel project in Kimberley, Western Australia, due to declining nickel prices. The move will make most of around 140 on-site staff redundant, “some with immediate effect”, said Panoramic.

And just days before, a major drop in lithium prices pushed producer Core Lithium to suspend mining at its Finniss project in the Northern Territory. On 9 January, The Australian said that more than 150 jobs had already been lost, with more to come.

The Kwinana facility refines bauxite ore from Alcoa’s Huntly bauxite mine in North Dandalup, WA. For the past year it has been operating at 80% of its nameplate capacity, with only four of the refineries’ five digesters operating since January 2023. That year, the facility produced 1.5m t/y of alumina, around 1.2m t/y of which was smelter-grade alumina. The remaining amount produced was non-metallurgical alumina.

Production at Kwinana cost more than US$410/t for 2023, leading to a net loss of around US$130m. In comparison, the average cost of production at Alcoa’s other refineries in WA, Pinjarra and Wagerup, was around US$250/t in Q4 of 2023.

After curtailment commences in Q2 of this year, Alcoa expects annual improvements of around US$70m at Kwinana, beginning in Q3.