Alcoa has charted a path forward for its San Ciprián aluminium complex in Spain. The company has entered a joint venture (JV) with Ignis Equity Holdings to breathe new life into the smelter's operations. Alcoa will hold a 75% stake and remain the managing operator, while Ignis takes a 25% share. To establish the JV and fund operations, Alcoa contributed $81 (€75) million, and Ignis put in $27 (€25) million. Alcoa may further inject up to $108 (€100) million as needed, with priority in future cash returns. Any additional funding must be agreed upon by both partners, with Alcoa covering 75% and Ignis 25%.

This JV paves the way for the planned 2025 restart of the San Ciprián smelter, fulfilling a promise made in the Viability Agreement with employees when the smelter halted in 2021 due to soaring energy costs. Preparation work for the restart was already in motion before the JV deal. In 2024, the smelter faced financial woes, posting a pre - tax net loss of around $50 million and negative operating cash flow of approximately $60 million. Net cash outlays that year covered employee compensation and holding costs during full curtailment, along with limited casthouse production to meet customer obligations. Given recent pricing trends, Alcoa anticipates a pre - tax and non - controlling interest net loss of $80 - $100 million for the smelter in 2025. The restart will require $10 million in capital expenditures.

In my view, this JV is a strategic move by Alcoa. The company is leveraging external investment to revive a key asset. By bringing in Ignis, Alcoa spreads the financial risk, which is crucial considering the smelter's past losses. However, the expected losses in 2025 show that the road to profitability will be challenging. The aluminium market is volatile, and high energy costs remain a threat. Alcoa will need to optimize operations and closely monitor market conditions to turn the San Ciprián smelter around. This venture also sets an example in the industry of how companies can collaborate to rescue struggling assets and potentially create value in the long run.