Alcoa Inc. will cut 2,000 jobs over the next 12 months as the aluminum company streamlines its operations as part of its new global business structure, the company announced Tuesday.
The company also announced Tuesday that it has agreed to sell its 46.5 percent stake in Elkem ASA, a Norwegian metals and energy group, to another Norwegian firm, Orkla ASA, for about $870 million.
The job cuts in some of Alcoa's North American, European and South American operations will result in after-tax restructuring charges of $20 million to $25 million, but should eventually save the company $45 million a year. Alcoa currently has about 131,000 workers in 43 countries.
"The elimination of jobs is always a difficult decision and one that is not taken lightly," said Alain Belda, chairman and chief executive officer. "But in order to put our company in the best competitive position and properly serve our global customers, they are necessary."
Alcoa said the sale of its stake in Elkem will result in an after-tax gain of about $180 million. The deal is expected to close on April 5.
Orkla, an Oslo-based chemicals, food, media and investment firm, increased its holdings in January to a controlling 50.3 percent stake in Elkem, and launched an offer to buy all remaining shares for 235 kroner ($36.62) each.
"We consider Elkem a well-run company with good prospects," Alcoa's Belda said. "However, we see no point in remaining a minority partner."
"We prefer to manage our assets and this offer gives our shareholders a very strong return on our investment in the company and allows us to use the cash more effectively on other projects with better returns," Belda said.
Alcoa said it remains committed to its existing Norwegian operations, which included an automotive castings business in Lista that serves European car makers, the company said in a statement. Alcoa also has a 50 percent stake in smelters in Lista and Mosjoen with a combined production capacity of 282,000 metric tons annually.
Alcoa also has a jointly owned plant under development to serve the smelters as well as Alcoa's greenfield Icelandic smelter that is set to begin production in 2007.
Alcoa expects to receive the proceeds of the offer in the second quarter. Alcoa will use the money to pay down debt, fund its upstream capital expansions and for restructuring expenses of existing operations, the company said in a statement announcing the deal Tuesday.
