Alcoa (NYSE:AA) today announced it will curtail the remaining production at its Rockdale, Texas aluminum smelter – comprising approximately 150,000 metric tons of production a year (mtpy) – beginning immediately as a result of uncompetitive power supply to that smelter and overall market conditions. In June, the company idled three of the plant’s six operating potlines representing approximately 120,000 mtpy of production as a result of ongoing local power supply issues.

As a result of the curtailment of the remainder of aluminum smelting in Rockdale, approximately 660 employees will be laid-off in addition to the approximately 160 employees who were impacted earlier. The company will continue to operate its aluminum atomizer in Rockdale as well as its anode operations there, employing a combined 140 people. Lay-offs at the facility will be implemented in a phased process, with the majority of the reductions occurring toward the end of November and in early December. Additionally, Alcoa will adjust alumina production accordingly.

“When we initially curtailed half of our aluminum production in Rockdale,” said John Thuestad, President of Alcoa’s US Primary Products business, “we said it would be extremely challenging to try to be competitive operating only half of the plant. Unfortunately, the cumulative effect of operating only half of the smelter, well-known issues regarding the cost and long-term reliability of the power supply in Rockdale, and current market conditions, has forced us to make this difficult decision.

“The ongoing effort and dedication of our employees and our community are what make this especially difficult,” said Thuestad. “We will look to work with our community and the region to ease the impact and try to return Rockdale to being a globally competitive producer of metal.”

Alcoa will record a third quarter 2008 pre-tax charge of approximately $48 million to cover the costs of the curtailment.

“Following this curtailment of smelting, Alcoa will continue to pay its cost of generation from Sandow Unit 4 and we will attempt to recover that cost by marketing the power in the Texas energy market,” said Thuestad.

Bernt Reitan, Executive Vice President and Group President Alcoa Primary Products, said, “Our re-powering efforts across our global portfolio has gone extremely well – such as our recent MOU in Quebec, covering approximately 25 percent of our output, and elsewhere.