Alumina admits cost spikes in third quarter due to refinery issues in Brazil
Bauxite miner Alumina Ltd (ASX: AWC) revealed on Thursday that its third quarter operating costs for the current year could soar by as much as $US11 million or $A11.73 million following the power outages and equipment commissioning problems that hit its Alumar refinery in Brazil.
The company maintains a 40 percent interest in the Alcoa World Alumina & Chemicals (AWAC), with the remaining 60 percent owned by US-based Alcoa, while AWAC in turn is a 54 percent owner of Alumar, with joint ownerships coming from the 36 percent of BHP Billiton Ltd and 10 percent of Rio Tinto Alcan Ltd.
Alumina added that the Alumar commissioning issues would lead to an anticipated third quarter costs impact for AWAC by up to $US32 million or $A34.11 million before tax, with a resulting exposure for the Australian firm of up to $US11 million or $11.73 million after tax.
The company, however, said that "the remediation of commissioning issues and impact of power outages is expected to have minimal impact on fourth quarter results."
On the other hand, Alcoa said that the Alumar project in Brazil is posed to incur overall production and equipments costs that could run to a high of $US45 million though it added that contingency measures have been in place to offset further possible losses.
AWAC said that a mobile unloader is now being used to temporarily take the place of the permanent unloader, which should be re-commissioned by late September and resume the refinery's annual full production capacity of 3.5 million tonnes of alumina.
As of 1051 AEST on Thursday, Alumina, BHP Billiton and Rio Tinto shares were all trading down at $1.925, $39.19 and $74.90 respectively.