Alcoa Offered Support by Australian Government

It's easy to know the value of a corporation to a city or country by the extent to which its government, and tax payers, are willing to help. In that vein, Alcoa Corporation is highly valued in Australia.

According to Reuters, the Australian government, led by Federal Minister Greg Hunt, has offered "substantial" financial support to help repair Alcoa's aluminum smelter in Victoria that was crippled in December by a state-wide blackout. The government had offered "significant, immediate financial support" as well as the potential for further assistance through Australia's Clean Energy Finance Corporation, said a spokesman for Minister Hunt.

The December power outage affected Alcoa's Portland smelter when a power interconnection between the states of Victoria and South Australia went down, knocking out power to both of the plant's potlines for about five-and-a-half hours.

The outage, which caused molten aluminum to solidify, forced Alcoa to postpose potlines. All told, with the company suffering production challenges at the 300,000-ton per year smelter, the long-term future of the facility was in doubt. Alcoa said in a statement last month that it was assessing the operational impact of the outage, saying it had "substantial challenges and analysis ahead."

However, in light of the recent support from the Australian government, there is optimism that the smelter may resume operation in a much quicker time than expected. "The state's substantial support is aimed at keeping the smelter open and sustainable into the future," said State Minister Philip Dalidakis in a statement, Reuters reports.

Dan Tehan, federal member of parliament for the district that includes Portland, told Reuters,"It is critically important to the local economy that we get the smelter back up and running at full production." He added, ”Everyone is working to ensure that the smelter remains open."

Alcoa stock closed Monday at $29.48, down 3.93%. The shares have risen 5% year to date, compared with a 1.44% gain in the S&P 500 (SPX) index.