Alcoa's Kwinana closure bill jumps by $131 million

The cost of managing water where it stores 140 million tonnes of caustic red mud has doubled.

Alcoa's Kwinana closure bill jumps by $131 million
Alcoa announced the curtailment of its Kwinana alumina refinery in January 2024 Alcoa

Alcoa will spend $US163 million ($260 million) managing water at its mountain of caustic red mud in Kwinana where savings from shutting down its 60-year-old alumina refinery have been slow to materialise.

When Alcoa announced the closure in January 2024, it estimated that it would cost up to $US200 million ($319 million).

The expenses included $US81 million for water management and $US55 million for the 800 employees who would be made redundant or redeployed.

Alcoa chief financial officer Molly Beerman said the US bauxite miner and aluminium producer had allocated a further $US82 million to manage water at its Kwinana bauxite residue site.

"During the fourth quarter, we completed the technical evaluation of the water management requirements for the residue areas and increased the duration of the transition and related equipment costs for ongoing water treatment," she told Wall Street analysts Thursday morning Perth time.

Alcoa's Kwinana bauxite residue is stored in a 2km by 3km area. Google Maps.

The Kwinana refinery made a loss of $US130 million in 2023, and Alcoa initially expected to save $US70 million a year once it closed down in mid-2024.

"The Kwinana curtailment has been slow to deliver savings due to high transition and holding costs," she said, adding that the company was still chasing the targeted savings.

Alcoa refers to the closure as a curtailment, as it may reopen the facility in the future. It continues to use the Kwinana site to export alumina from its Pinjarra refinery.

If the site closed permanently, Alcoa would face further significant costs.

Alcoa still has $US140 million set aside to spend at Kwinana and expects to outlay a large majority of that this year.

Over six decades, Alcoa has piled 140 million tonnes of highly caustic waste inland of the Kwinana refinery as high as 85m.

Near its three WA refineries - Kwinana, Pinjarra, and Wagerup - the company stores enough red mud to fill Optus Stadium more than 350 times. In 2024, the company disclosed that 21 storage areas failed stability checks.

Alcoa will spend $US70 million in 2024 preparing to move into a new mining area in the jarrah forest, with more significant expenses to follow in 2026.

The company has been under pressure in WA since it was revealed two years ago that its strip mining near Serpentine Dam threatened Perth's water supply.

In December 2024, the WA government gave it permission to keep mining while the independent Environmental Protection Authority reviewed its operations. It is now under a modified deregulatory regime that WA Premier Roger Cook said strengthened the protection of the environment.

Alcoa chief executive officer Bill Oplinger said progressing mining approvals in WA was "of paramount importance."

The company is expected to release for public comment in coming months a detailed environmental assessment of an expansion of its Huntly mine inland of Pinjarra.

"We successfully operated under our new mining conditions in Western Australia (in 2024), which included daily observation of our mining and rehabilitation practices by certain regulators," he said.

On Wednesday, the WA Greens, which could hold the balance of power in WA's upper house after the March election, called for an end to mining in WA's forests, phased in over a decade.

Greens WA forest spokeswoman Jess Beckerling said the jarrah forest could not be restored after bauxite mining.

“It’s staggering that the Cook Government has allowed clearing to continue even in the face of the Water Corporation stating that a contamination event from Alcoa’s strip mining is considered certain and that it constitutes the most significant risk to Perth and the South West’s water quality,” she said.

Cook rejected the move as it threatened 7000 jobs with Alcoa and fellow bauxite miner South32.

"We’re transitioning Alcoa to a modern environmental approvals framework, and we’ve tightened controls over their operations while protecting the thousands of jobs their operations support in WA," he said.

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