| Item 2.05 | Costs Associated with Exit or Disposal Activities. |
On December 9, 2021, Alcoa Corporation (the “Company”) approved the permanent closure of the Wenatchee aluminum smelter (the “Smelter”) located in Washington state, U.S.A, effective immediately. The Smelter has been fully curtailed since 2015. The Company’s decision to permanently close the Smelter was made in connection with the Company’s ongoing strategic review of its global production capacities to lower costs and drive sustainable profitability, which includes a review of 1.5 million metric tons of aluminum smelting capacity, considering opportunities for significant improvements, curtailments, closures, or divestitures. The Smelter has a total capacity of 146,000 metric-tons-per-year. Decommissioning and demolition activities to prepare the site for potential redevelopment will begin immediately.
The Company will record restructuring and related charges in the fourth quarter of 2021 of approximately $75 million (pre- and after-tax), or $0.40 per share, related to the permanent closure of the Smelter. These charges include: approximately $24 million of asset impairments; approximately $40 million to write off the remaining net book value of various assets; approximately $21 million related to decommissioning and demolition obligations, such as asbestos abatement and material disposal; and $1 million of employee severance costs; partially offset by approximately $11 million reduction to energy contract related liabilities. Cash outlays related to the permanent closure of the site are expected to be approximately $60 million over the next seven years, with approximately $10 million to be spent in 2022.
The Smelter currently has 18 employees, some of whom will remain to assist with decommissioning, demolition and redevelopment work.
A copy of the related press release is attached hereto as Exhibit 99.1.
Forward-Looking Statements
This Current Report on Form 8-K contains statements that relate to future events and expectations, including those relating to permanent closure of the smelter and associated decommissioning, demolition, and potential redevelopment activities and the Company’s expectations regarding the timing of the closure activities and types and estimates of associated costs and financial impact, and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as “ambition,” “anticipates,” “believes,” “could,” “develop,” “endeavors,” “estimates,” “expects,” “forecasts,” “goal,” “intends,” “may,” “outlook,” “plans,” “potential,” “projects,” “reach,” “seeks,” “sees,” “should,” “targets,” “will,” “working,” “would,” or other words of similar meaning. All statements by Alcoa Corporation that reflect expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements. Forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and changes in circumstances that are difficult to predict. Although Alcoa Corporation believes that the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that these expectations will be attained, and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties. Additional information concerning factors that could cause actual results to differ materially from those projected in the forward-looking statements is contained in Alcoa Corporation’s filings with the Securities and Exchange Commission. Alcoa Corporation disclaims any obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
Exhibit | | |
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| 104 | | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
The internet addresses in the press release attached as Exhibit 99.1 hereto are included only as inactive textual references and are not intended to be active links to the information therein. Information contained on such websites or platforms, or that can be accessed therein, do not constitute a part of this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| | ALCOA CORPORATION |
| | | |
| Date: December 13, 2021 | By: | |
| | | Marissa P. Earnest |
| | | Senior Vice President, Chief Governance Counsel
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| | | and Secretary
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