Norsk Hydro AS (OSE: NHY) has started a consultation process with the local employees on its Kurri Kurri aluminium smelter in Hunter Valley, New South Wales, Australia for possible production curtailments. Kurri Kurri plant has three production lines with a total production capacity of 180,000 tonnes per annum. Local media says that at the moment an estimated 50-150 jobs may be at risk, with the apparent closure of one production line. According to an earlier miningaustralia.com.au report, workers had refused to delay a pay rise for one year.
Hydro's stock had performed well after a better than expected report from Alcoa had raised hopes for improving business conditions. However, in the current press release Hydro says that the negotiations have been started due to low aluminium prices and uncertain market prospect due to macroeconomic uncertainty.
Additionally the strength showed by the Aussie Dollar against USD makes Kurri Kurri plant less competitive in the current situation. The small and aging smelter has also been struggling to secure a new electricity contract and other manufacturers in the region have also been downsizing production. Unless market conditions improve significantly, the entire production plant may go under the hammer.
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