The plant's small scale, outdated technology and logistical factors also impair its operating efficiency. The closure will affect approximately 300 employees.
The 60,000-tonnes-per-year facility has been operating at a loss for nearly two years despite management efforts to improve performance. High energy prices and other structural costs will keep the plant unprofitable at expected aluminum prices for the foreseeable future.
"We made significant efforts to improve performance at the smelter, including restructuring the workforce, installing new plant leadership and adjusting production levels," said Alexandre Almeida, president of Novelis South America. "Unfortunately, we could not achieve profitability for the plant."
"This was a very difficult decision for us to make especially in light of its impact on our employees," continued Almeida. "I want to thank them for their support while we tried to find a sustainable solution for the plant. We will offer the employees a severance package, extended health benefits and job search assistance."
The shutdown of the plant will not impact Novelis' other operations in Brazil, including its other aluminum smelter at Ouro Preto. Novelis will retain its focus on the company's core business of aluminum rolling, and customer deliveries will not be affected.