Alcoa inks new wind energy deal for smelter in Spain

US aluminium producer Alcoa Corp (NYSE:AA) has signed a pre-agreement with Spanish renewables company Capital Energy to secure some 573 MW of wind power for its San Ciprian smelter in northwestern Spain.

In an announcement issued last week, Capital Energy said it had committed to supply 876 GWh per year to the smelter for an initial period of ten years. The power would come from 11 wind farms that Capital Energy is currently developing in the region of Galicia.

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The firm said it had been granted grid access rights for all of the projects, and is now working on securing the permits.

The supply of wind energy to the Galicia-based San Ciprian facility is set to commence in 2024.

The latest pre-agreement comes after Alcoa signed a similar arrangement with renewables group Greenalia SA (BME:GRN) to procure locally-sourced wind power for the energy-intensive smelter.

Alcoa has struggled with the San Ciprian plant for years due to astronomic electricity prices in Spain, and considered closure and collective dismissal in 2020 after racking up losses. According to the company, energy expenses accounted for 60% of the total costs of primary aluminium production in 2021.

Last week, Alcoa signed an agreement with the San Ciprian workers to curtail the activity at the plant for two years and restart in January 2024. During this time, Alcoa will pay the employees full wages, invest in the facility and secure long-term power purchase agreements.