Alcoa of Australia is owned 60 per cent by Alcoa Inc in the US and 40 per cent by ASX-listed Alumina Limited.
The global company’s announced demerger slated for the second half of 2016 will see it become two publicly traded companies; Upstream and Value-Add. Alcoa of Australia’s 60 per cent shareholding would become part of a new global Upstream company to be created by Alcoa (which would retain the Alcoa name).
Samantha James spoke to Alcoa of Australia’s subsidiary Alcoa Mining president Garrett Dixon about its Australian development plans.
Q. How important are Alcoa’s Australian mines to Alcoa’s global operations?
Alcoa of Australia has been an integral part of Alcoa’s global business for more than 50 years. Our WA bauxite mines (Huntly and Willowdale) are a critical part of the business providing the feedstock for our three WA refineries (Kwinana, Pinjarra and Wagerup) and are integral to the company’s future in the state.
Q.Why did Alcoa decide to demerge its assets and how will the move impact its Australian businesses?
Over the past few years, we have successfully transformed Alcoa, creating two strong value engines – Upstream and Value-Add. Each is now ready to shape its own future as a strong standalone company.
The Upstream Company, Alcoa, will comprise the five business units that today make up Global Primary Products: Bauxite, Alumina, Aluminium, Cast Products and Energy. The Value-Add company – Arconic – will include the three business segments that today comprise Alcoa’s Value Add portfolio: Global Rolled Products, Engineered Products and Solutions, and Transportation and Construction Solutions.
Each company will be a Fortune 500 industry leader with significant global reach that will attract an investor base best suited to its unique value proposition and operational and financial characteristics. The company separation will have very little impact on Alcoa of Australia, which is comprised only of upstream assets. We have enviable mining and refining assets in WA and an efficient smelter in Portland, Victoria that will all be part of the new Alcoa.
I am very optimistic the separation will present new opportunities for a company dedicated entirely to the upstream businesses. Alcoa has established a well-defined governance structure led by a steering committee, a separation program office and functional teams to separate Alcoa into two standalone companies.
Q. In February 2016 Alcoa of Australia achieved a milestone 1 billion tonnes of bauxite mined. What was the significance of the milestone for the company as a whole and for Alcoa Mining?
The one billionth tonne of bauxite mined was a very significant milestone in Alcoa’s history for multiple reasons.
It was a celebration of the tremendous progress we have made in our mining and jarrah forest rehabilitation techniques during the past 53 years, both of which set us apart as a world leader in our field. And it was a celebration of Alcoa’s world-class mining, refining and smelting system in Australia.
Our ability to add value to the Darling Range bauxite we mine through alumina and aluminium production has had tremendous flow on effects for the local, state and national economies for more than 50 years.
Q. Alcoa has been named the most admired metals company by Fortune magazine for five consecutive years and has been on the most admired list for more than 30 years. What makes the company ‘most admired’?
Alcoa is a company that has grown and evolved across more than 125 years. We have successfully navigated through some of the most challenging of market cycles and each time emerged stronger. And soon we will embark on a new and exciting journey as we separate into two new standalone companies.
At the heart of the company are our people who are both loyal and resourceful. I am continually impressed by the drive and determination of individuals to identify new and innovative ways to overcome challenges and strengthen the business.
Q. Alcoa projected “robust global aluminium demand growth, up 6 per cent over 2015, and global alumina and aluminium deficits in 2016”. Could you provide details on the basis of these projections and how they will benefit the company?
Alcoa’s market predictions are based on extensive market research and analysis undertaken by Alcoa and expert third parties. Aluminium demand projections look specifically at demand in key market segments including transportation (including aerospace), building and construction and packaging. The projections for continued aluminium demand growth, along with alumina and aluminium supply deficits show that the market is strong.
Q. How important are community relations and investment to Alcoa’s Australian businesses?
Community consultation and investment are an integral part of doing business for Alcoa. We understand that to maintain our social licence to operate we need to work in a way that meets with community expectations.
Alcoa’s community investment program is driven by our commitment to sustainable development and a desire to support reputable non-profit and community based organisations that deliver long term community benefits. We support partnerships and initiatives that help build stronger communities for the future with a focus on education, environment and sustainability and community wellbeing.
In 2015 we invested more than $4 million in community and non-profit organisations in Australia through grant making and employee volunteer programs.