Boston, MA 10/24/2013 (wallstreetpr) – Alcoa Inc (NYSE:AA) announced the formation of a new joint venture with VSMPO-AVISMA Corporation. VSMPO-AVISMA Corp. is a leading manufacturer of titanium ingots and forged products in Russia. The JV will develop high end titanium and aluminum products for the fast growing aerospace industry and is expected to be operational by 2016. The aerospace industry is growing at 9-10%. The industry is always in search of lighter materials to decrease fuel costs and increase efficiencies. The materials also have to withstand high stress levels. The JV hopes to develop and manufacture high-end components like landing gear and wing components. The V is a marriage between Alcoa’s expertise in manufacturing with VSMPO-AVISMA’s expertise in production of titanium. It is a win-win situation for both parties as Alcoa will increase its competitiveness and market share in the aerospace industry. The Russian partner will get access to forging equipment that will increase its output.
Alcoa has been struggling for some time now due to oversupply of aluminum in the global market. The last three months have seen a fall in output of aluminum, leading to some price increases. The fall is expected to be short-lived, and the company is trying to cut its reliance on aluminum prices by expanding further into value added products. Alcoa is also trying to cut costs. It is shifting its primary aluminum production to Middle East from Europe and North America. This will enable it to take advantage of lower fuel costs, one of the major costs in the industry. The Ma’aden-Alcoa JV in Saudi Arabia is building two potlines and a huge smelter with a capacity of 740,000 tonnes per year. The project has a mine, a refinery as well as a rolling mill and is expected to cost $10.8 billion. This will be the lowest-cost facility in the world.