Alcoa Corporation Reaches Early Termination Agreement for Power Contract Tied to Curtailed Rockdale Smelter in Texas
ITTSBURGH–(BUSINESS WIRE)–Alcoa Corporation (NYSE:AA), a global leader in bauxite, alumina and aluminum products, today announced that the Company and power provider Luminant Generation Company LLC have terminated the electricity contract tied to Alcoa’s Rockdale Operations in Texas. The smelter at Rockdale has been fully curtailed since the end of 2008.
The termination of the contract, which had been set to expire no later than 2038, was effective as of October 1, 2017.
While the Company sold surplus electricity since the smelter’s curtailment, Alcoa’s cost of power under the contract exceeded the related revenue.
The Company expects an annual improvement to net income and adjusted EBITDA (earnings before interest, tax, depreciation and amortization) of $60 million to $70 million as a result of the contract termination, beginning in the fourth quarter of 2017.
“Reaching a resolution on the Rockdale power contract aligns with two of our strategic priorities – to reduce complexity and to drive returns,” said William Oplinger, Executive Vice President and Chief Financial Officer. “It eliminates a complex, long-term contract tied to the Rockdale location, and positions Alcoa for improved profitability and higher returns.”