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Alcoa's troubled Australian smelter gets over A$200M of state funding

Alcoa Corp.'s Portland aluminum smelter in Victoria, Australia, will be able to continue operations until 2021 after the company secured a funding package of over A$200 million from the Australian government, The Australian reported Jan. 20.

Previously, Reuters put the figure at A$240 million, comprising A$200 million in state funds over a four-year period and a A$40 million interest-free loan to help repair the 300,000-tonne-per-annum operation, the closure of which could impact 2,000 jobs in the region.

A major portion of the funds will be used to repair the smelter, which was damaged in December 2016 following a statewide power outage. The smelter was running at less than 60% of its design capacity at a cost of A$1 million per day after the damage.

Separately, Alcoa also reached an agreement with power supplier AGL to secure power at below market price for the operation. The previous subsidized 20-year power contract expired in 2016.

Alcoa added that it will immediately start work to restart smelting capacity at the Portland aluminum smelter. The restoration of the curtailed production is expected to take approximately six months.

Elsewhere, Rio Tinto announced that it would cut about 8% aluminum output at a smelter in Queensland, Australia, due to soaring electricity prices.