Mumbai: Alcoa Inc, the world's leading producer of primary and fabricated aluminium, said that it would close its Rockdale, Texas operations and lay off around 660 workers by year-end because of ''local power supply problems and  decreasing demand'' for aluminium.

The lay-off is in addition to the 160 already laid off and Alcoa expects to record a third quarter 2008 pre-tax charge of approximately $48 million to cover the costs of the production cut-back.

Alcoa plans to curtail production at its 150,000 tonne Rockdale aluminum smelter with immediate effect because of, what it said, uncompetitive power supply to the smelter and overall market conditions.

In June, the company idled three of the plant's six operating potlines, representing approximately 120,000 tpa of production, because of power supply problems.

The company will continue to operate its aluminum atomiser in Rockdale as well as its anode operations there, employing a total of 140 people. Lay-offs at the facility will be implemented in a phased manner, with the majority of the reductions occurring toward the end of November and in early December. Alcoa said it 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,'' he added.

''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.

''Our re-powering efforts across our global portfolio has gone extremely well – such as our recent MoU in Quebec, covering approximately 25 per cent of our output, and elsewhere. We will continue to explore options to secure a competitive long-term power solution that enables profitable operation in Rockdale, just as we have done across the world,'' said Bernt Reitan, executive vice president and group president Alcoa Primary Products.

Alcoa, the world leader in the production and management of primary aluminum, fabricated aluminum and alumina combined, plays an active and growing role in all major aspects of the industry.

Alcoa designs and supplies products for the aerospace, automotive, packaging, building and construction, commercial transportation and industrial markets. Its products include aluminum products and components, including flat-rolled products, hard alloy extrusions, and forgings, Alcoa also markets Alcoa wheels, fastening systems, precision and investment castings, and building systems.

Alcoa makes a very sustainable product: almost 70 per cent of the aluminum ever produced is still in use, equaling 480 million tonnes of a total 690 million tonnes manufactured since 1886.

The company has 97,000 employees in 34 countries and has been named one of the top most sustainable corporations in the world at the World Economic Forum in Davos, Switzerland.

Aluminum is experiencing a fall in prices and increased competition for a shrinking market, and Alcoa hopes to remain competitive against bigger rivals Rio Tinto PLC and United Co. Rusal by curtailing production and power costs.