Alcoa scraps plan to build smelter in Brazil
PITTSBURGH - - Alcoa Inc. said recently it has scrapped plans to spend $1.3 billion building a smelter and power plants in Brazil because the country's new electricity regulation would drive up production costs.
The Pittsburgh-based aluminum giant would reconsider the decision if policies turn in its favour, spokesman Kevin Lowery said. Brazil created an agency to oversee the electricity market last month.
Alcoa has been moving production abroad in search of lower production costs. Electricity accounts for 25 per cent of those costs, Lowery said.
The company is building a new smelter in Iceland, recently announced a deal in Bahrain, is studying Brunei and has struck a joint venture in China.
"We're always looking for areas that we can get low-cost and long-term and reliable energy supplies," Lowery said.
Alcoa initially planned to invest as much as $2.7 billion in Brazil by building a smelter capable of making up to 500,000 metric tons of aluminum per year.
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