Aluminum giant Alcoa Inc. AA announced that it will permanently shutter its 269,000 metric ton Warrick Operations smelter in Evansville, IN by the end of the first quarter of 2016. However, the rolling mill and power plant will continue to operate in Indiana.

The company will also cut alumina production by 1 million metric tons by the end of second quarter 2016, including curtailment of refining capacity at its Point Comfort operations in Texas. Point Comfort is part of the Alcoa World Alumina and Chemicals group of companies owned 60% by Alcoa and 40% by Alumina Limited.

Alcoa is taking this step in order to boost the competitiveness of its Upstream business amid a low aluminum pricing environment.

As a result of this, the company will take an associated charge of about $120 million post-tax, or 9 cents per share, of which roughly 45% will be non-cash, in the fourth quarter of 2015. The company also expects to incur additional charges between $50 million and $60 million post -tax, or 4 cents to 5 cents per share, of which almost 80% will be non-cash, in the first quarter of 2016.

With the implementation of these actions and those announced in the fourth quarter, Alcoa will have reduced or closed about 812,000 metric tons of smelting capacity and 3.3 million metric tons of refining capacity since its Mar 2015 announcement of the review of 500,000 metric tons of smelting capacity and 2.8 million metric tons of refining capacity.

Alcoa expects the supply-demand balances in both the alumina and aluminum markets for 2016 to improve. It remains on track to meet or exceed its 2016 targets of moving to the 38th percentile on the aluminum cost curve and 21st percentile on the alumina cost curve.

Alcoa is slated to release its results for the fourth quarter of 2015 after the closing bell on Jan 11.

Alcoa is a Zacks Rank #4 (Sell) stock.

Some better-ranked stocks in the mining space include Energy Fuels Inc. UUUU, Agnico Eagle Mines Limited AEM and AngloGold Ashanti Ltd. AU. All of them carry a Zacks Rank #2 (Buy).

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