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Alumina flags $136m hit from write-offs

AAP logoAAP 3/01/2017 Prashant Mehra

Australian miner and metals producer Alumina has outlined the financial hit from the decision by its AWAC joint venture to close some operations in Suriname.

US aluminium giant Alcoa, which owns 60 per cent of the Alcoa World Alumina and Chemicals (AWAC) joint venture, on Tuesday said it would permanently close the Suralco alumina refinery and bauxite mines in Suriname, more than a year after stopping production at the plant.

Alumina said AWAC will record restructuring-related charges of $108 million in the fourth quarter just ended, of which its share will be $43 million.

The joint venture will also incur cash costs of $181 million over five years, of which $29 million will be incurred in 2017. Alumina's share of the costs will be limited to $12 million in 2017.

Alumina said AWAC will also incur a charge of $52 million related to an impairment of its interest in a Western Australia gas field. Alumina's share of this charge will be $21 million, to be recorded in the December quarter results, it said.

The two joint venture partners have shut more than three million tonnes of refinery capacity globally in the past two years amid a prolonged downturn in prices, but have so far spared their three alumina refineries in Western Australia.

Alcoa in November completed a split of its global operations into two independent, publicly traded companies, with one focused on upstream mining and smelting and the other on aluminium products, as part of efforts to tackle the price and demand slump.

Alumina shares closed Wednesday down 3.0 cents, or 1.63 per cent, at $1.815.

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