Alcoa closes Kentucky plant

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Alcoa today announced that it will close its Hawesville, Kentucky, automotive casting facility by the end of 2005.

The plant closure, which will impact 158 employees, is a result of excess capacity in Alcoa's automotive castings manufacturing system. Costs for the closing will total approximately $45 to $50 million pre-tax, the majority of which will be non-cash impairment charges and will impact second quarter earnings.

"This plant closing is not a reflection on the strong workforce we have in Hawesville. They are a talented and dedicated group," said Allen Zwierzchowski, President - Alcoa Automotive Castings. "Unfortunately this facility is operating at less than 20 percent of its capacity. With certain program contracts winding down, the plant from a business perspective is no longer viable."

Alcoa plans to sell the facility and will work with the community to attract buyers that could utilise the plant and lessen the impact of the closing.

Headquartered in Farmington Hills, Michigan, Alcoa Automotive Castings will continue to operate its other castings facilities in Farsund, Norway and Fruitport, Michigan.

Seperately, Alcoa this week announced plans to invest $45 million to purchase equipment and the rights to mine coal from Vigo Coal Company to power its aluminium smelter in Warrick, Indiana.

The investment also calls for the addition of a coal preparation facility and material handling infrastructure to enable transport of coal via railcar to the smelter's power plant. The coal is expected to be available for use by Alcoa Warrick Operations by July 2006.

Under the terms of the agreement, Alcoa will purchase the rights to mine 2,500 acres in the reserve at the Friendsville Mine near Mount Carmel, Illinois, for 10 years.

The mine will be capable of producing approximately one million tons of coal a year, approximately 45 percent of the power plant's fuel requirement. Vigo Coal will provide mining services to Alcoa. The mine will contribute approximately $20 million annually to the local Illinois economy.

Alcoa Warrick Operations is an integrated facility housing a 309,000 metric ton per year (mtpy) primary aluminium smelter and rigid packaging operations that produce aluminium sheet for beverage and food can ends, tabs, and other flat-rolled aluminium products.