QUESTIONS are being asked about the future of the Alcoa-managed Kwinana alumina refinery in Western Australia.

The concern came as Alcoa announced it would cut 443,000 tonnes of production at the Suralco refinery in Jamaica as part of its plan to cut 2.8 million tonnes of annual output from its global ¬alumina “system”, a 60:40 joint venture (AWAC) with Melbourne’s Alumina.

The Suralco cut was expected and raised the question of where the next cut would be to hit the 2.8 million tonne target, a response to depressed prices for the intermediate aluminium product.

Equity analysts at Citi said Kwinana was the “next likely candidate for curtailment/closure given it is the smallest, oldest and highest cost’’ of AWAC’s three West Australian refineries.

But industry analysts are not so sure, saying Kwinana was integral to the West Australian alumina system, and while it has higher costs than the other two refineries, it was likely to be lower cost than other closure options, notably Point Comfort in the US.

Point Comfort has been benefiting from lower gas prices. But Kwinana has benefited from the sharp fall in the dollar. A full closure of Kwinana — rated at a capacity of 2.25 million tonnes annually — would nevertheless put Alcoa within reach of its all up target of 2.8 million tonnes in ¬production cuts.

The AWAC joint venture has previously closed the Point Henry aluminium smelter near Geelong. Alumina broke ranks with its senior partner to reveal that while Alcoa was also looking for 500,000 tonnes of aluminium smelting cuts, the 55 per cent-owned AWAC smelter at Portland in western Victoria was safe from closure. Alumina did not say if Kwinana was also safe from closure. The operation is more than 50- years-old and was a loss-maker three years ago when the exchange rate was at more than parity, and aluminium metal ¬prices were under pressure.

Kwinana is now on a much better footing because of the fall in the dollar, and margins have improved because of AWAC cost-cutting. The aim of Alcoa’s production cuts and closures is to improve its competitive position of the global cost curve. It is the same story at other Western producers in response to the rise of production from China.

Apart from the Point Henry closure, the Australian industry has also seen the closure of the Kurri Kurri smelter in NSW by Norsk Hydro in 2012, and the end to alumina production by Rio Tinto at Gove in the Northern Territory in 2013.