Alcoa lifts force majeure on Western Australian alumina output

Alcoa has lifted the force majeure for its Western Australian alumina business, an Alcoa spokesperson confirmed to S&P Global Commodity Insights April 26.

Prior to the confirmation from Alcoa, several market sources had said they had received notice regarding the lifting of the force majeure as early as April 21. Two sources familiar with Alcoa's global alumina operations also separately confirmed the lifting of the force majeure.

Alcoa in January notified its alumina customers of a force majeure resulting from the impact of reduced natural gas supply to its operations in Western Australia that had cut about 30% of output at the Kwinana alumina refinery.

About 20% or 438,000 mt/year of alumina refining capacity at the Kwinana plant was still curtailed as of March 31 according to production and capacity information released by Alcoa in its first quarter 2023 results, as one of the five digesters remains offline.

The refinery is owned and operated by Alcoa World Alumina and Chemicals, a joint venture between aluminum giant Alcoa -- which manages day-to-day global operations -- and leading metals and mining Australian investor Alumina Limited. Alcoa has a 60% interest in the JV and Alumina Ltd. a 40%.

The Kwinana facility has a nameplate capacity of nearly 2.2 million mt/year, of which 85% is smelter-grade alumina and the balance non-metallurgical alumina.

Platts, part of S&P Global Commodity Insights, assessed benchmark Australian alumina down $2/mt day on day at $353/mt FOB April 25. Global market views across the spectrum were generally split between expectations of flat demand capping price gains and prior supply disruptions decelerating the pace of further decline, but generally saw more indicators tilting prices to the downside following the resolution of the force majeure.

Bauxite mine approval prolongs lower output

"Although the gas supply situation has largely been resolved, the digester remains offline due to the bauxite grade issues," Alumina Ltd. said in an April 20 announcement following Alcoa's quarterly earnings release.

An Alcoa spokesperson said the decision to keep one of five digesters offline was now attributed to the extended process for Alcoa's bauxite mine approvals in Western Australia, and the key factor was "no longer the natural gas situation" that caused the initial curtailment in January.

"As a result of a prolonged annual mine plan approval process at its Huntly mine, which supplies the Kwinana and Pinjarra refineries, Alcoa began mining lower bauxite grades in April 2023 from areas already permitted under existing approvals," the company said, keeping one of the five digesters at the Kwinana refinery offline as a result.

"This change is isolated to the Huntly mine that supplies the Pinjarra and Kwinana refineries. Operating those refineries with lower quality bauxite decreases alumina output and increases caustic usage," it added.

Alcoa said it was currently "working through the regulatory process" with the relevant entities, but flagged the impact of lower bauxite quality on alumina operations could be expected into 2024.