Aughinish Alumina back in red after prices slump

The largest alumina refinery in Europe, Aughinish Alumina on the Shannon estuary, went back into the red last year.

Limerick Alumina Refining Ltd posted a pre-tax loss of $40.5m (€34m) as revenues slumped 24% to $520m due to a drop in the price of alumina worldwide.

Limerick Alumina Refining is owned by Russia’s Rusal, which is controlled by oligarch Oleg Deripaska.

It purchased Aughinish Alumina from commodities trading giant Glencore, 10 years ago.

“The outlook in 2017 is much more positive due to higher sales prices and continuing lower production costs, which are forecasted to lead to a return to profitability,” the company aid.

Its directors said the effect of the lower alumina prices was somewhat offset by lower production costs in 2016.

The loss last year includes a full impairment charge of $15.8m relating to its investment in North Aluminium Shenzhen Co Ltd.

“The parent continued to invest significant capital in the company to ensure its longterm sustainability and the directors have received a written confirmation of support from the company’s parent,” it said.

Staff costs at the facility increased slightly to $50.35m. It employs about 450 people.

The loss includes net interest payments of $6.4m. The company had incurred interest payments on a $400m facility from Glencore since 2014 but the loan was fully repaid by the end of last year.

About 70% of the bauxite processed at Aughinish is imported from Guinea in west Africa, with the remainder of the rock sourced from Brazil. The finished product, alumina, is exported for further processing through smelting to aluminum metal.