Alcoa is back to aluminum mining, production in Brazil

U.S.-based multinational Alcoa, which has been operating in the Brazilian aluminum industry for almost six decades, is once again positioning itself in the country, with production ranging from bauxite mining to alumina and raw metal. Globally, aluminum has gained new market dynamics, with applications in the electrification of vehicles and other fields, such as electricity and recyclable packaging.

The company operates three sites in the country – in Juruti (state of Pará) it extracts and processes bauxite mineral; in São Luís (Maranhão), in the Alumar consortium, it has an alumina and primary aluminum plant; the Poços de Caldas unit (Minas Gerais) is focused on the integrated production of special alumina and has an aluminum scrap recycling unit. The company also holds stakes in four hydroelectric plants.

“It is a 57-year history that is gaining new momentum with the changing landscape for aluminum worldwide, new applications and the use of renewable energy, which will set the tone for the industry in the future,” Otávio Carvalheira, Alcoa president in Brazil, told Valor.

The executive knows the company and the industry well after working for 34 years in several functions in Brazil and abroad, including China. “I spent three years in Shanghai working in the aluminum rolling field.”

He returned in 2008 and took the helm of the Brazilian subsidiary in 2016, when Alcoa decided to split the operations that transform metal into finished products, creating Arconic.

A year and a half before, the company had decided to temporarily halt – almost seven years later – the production of aluminum in Brazil due to the lack of competitiveness in power prices. The input is the item of the greatest weight in the metallurgy of the metal. In the country, it has even exceeded 50%.

Under the new conditions of aluminum demand, high prices and the use of competitively priced renewable power – in long-term contracts – the company decided this year to restart its smelter at the Alumar consortium, in which it has a 60% stake and is the operator. The partner is Australia’s South32, with 40%, which made the same decision.

Together, the two companies are investing R$957 million ($186 million). Alcoa will inject R$520 million, the executive said.

In 2023, Alcoa already foresees placing 268,000 tonnes of primary metal on the market, relative to its stake in Alumar [the foundry’s total capacity is 447,000 tonnes]. The metal will be mainly destined for the Brazilian demand, which grew 11% in 2021. Local manufacturers have had to import a substantial amount of raw aluminum.

From 2010 to 2015, the production was halted in six foundries in the country, according to trade group Abal – only Alcoa and South32 are being resumed. The all-time high of 1.66 million tonnes was reached in 2008. It gradually fell back to 685,000 tonnes in 2020.

“Now, with the restart of Alumar, the country is again self-sufficient in primary metal,” Mr. Carvalheira said. This year, Alumar – which is 25 kilometers from the capital city of Maranhão and started operating in 1984 – expects to produce 120,000 to 130,000 tonnes with the gradual restart of furnaces.

The restart, Mr. Carvalheira said, led to the rehiring of 416 employees for the foundry. In all, including the alumina division, the consortium now has 1,250 employees.

“Alcoa has closed the cycle again and this is the result of a combination of factors: long-term vision, local and global demand, metal supply, environmental issues, use of competitive renewable power (wind and solar), a metal associated with electrification solutions,” the executive said. The scenarios, he said, show a consistent global demand for aluminum throughout the cycle – and, of course, the metal is at a favorable price in relation to the cost base.

Another investment front is the Poços de Caldas unit, where the company started in Brazil and operated through 2015. The facility was also closed for good due to the high cost of production, especially power, compared with the international market. Aluminum is priced in dollars on the London Metal Exchange.

Currently, the operations encompass mining, refinery, chemicals, remelting, and aluminum powder plant – one of the products generated are specialty aluminas, which are used in water treatment (aluminum sulfate), and in the refractory and abrasives industries, among other applications. The output reaches 180,000 tonnes per year.

At the moment, the executive said, the company is investing more than R$300 million to install a new technology for the unit’s waste treatment system – classified as industrial. In the filter press, which starts operating in June, the refuse originated in the refinery is transformed into a dry cake that will be placed in a proper area by the dry stacking method.

On the same site, Alcoa has a recycling facility, aimed at producing aluminum from scrap that is recovered through blending with primary metal. The result is ingots, billets and a product considered noble – aluminum powder. The volume ranges between 45,000 and 50,000 tonnes a year and goes to the domestic and foreign markets.

Source: Valor International

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