Caustic soda consumption in Australia is expected to fall as the US aluminium producer Alcoa plans to fully halt alumina production at its Kwinana refinery in Australia by the third quarter of this year, with the process to start in the second quarter.
According to Argus estimates, the closure of this alumina refinery will reduce Australia's imports of caustic soda by approximately 10pc in 2024. The refinery is estimated to consume approximately 220,000dmt/yr of caustic soda.
The reduction in demand coupled with the issues in the Red Sea are already beginning to affect caustic soda prices in Northeast Asia. According to the "Argus Chlor-Alkali and Derivatives" report, caustic soda prices have fallen $15-20/dmt since the end of December.
The Kwinana refinery in Western Australia has a capacity of 2.2mn t/yr of alumina, of which around 85pc is smelter-grade metallurgical alumina. Alcoa's three alumina refineries in Australia — Kwinana, Pinjarra and Wagerup — have a combined production capacity of around 9.8mn t/yr based on its 2022 annual report, accounting for 8pc of global supply.
The Kwinana refinery has been operating at around 80pc of its nameplate capacity since January 2023, Alcoa said on 8 January. The decision to close the 60-year-old refinery is based on factors like its age, scale, operating costs, current bauxite grades and current market conditions, Alcoa's executive vice-president Matt Reed said.
Alcoa does not expect production at the Pinjarra and Wagerup refineries to be impacted by the curtailment at Kwinana. The broader alumina supply chain would also not be affected, Alcoa said.
The Kwinana plant's workforce will be cut from around 800 at the start of this year to about 250 in the third quarter when all alumina production will cease. "Certain processes, however, will continue until about the third quarter of 2025, when employee numbers will be further reduced to approximately 50," Alcoa said.
