Adbri subsidiary Cockburn Cement is expected to cut up to 50 jobs after Alcoa of Australia did not renew its contract to purchase about $70 million of lime each year.
South Australia-based Adbri said it was too early to assess the full financial impact of the loss of the contract, which was due to expire on June 30 next year.
However, between 40 and 50 Cockburn Cement jobs including contractors are likely to be affected.
Adbri chief executive Nick Miller said the group had supplied lime product to Alcoa for almost 50 years.
“We are disappointed with Alcoa’s decision to displace locally manufacture product with imports from multiple sources,” Mr Miller said in an ASX announcement.
“We will work quickly to mitigate the impact on local jobs supporting our lime business and we remain committed to supplying our WA resources sector customers.”
Adbri, formerly known as Adelaide Brighton, recently said in an investor presentation that the Western Australian market for cement and lime was expected to grow in 2020 driven by demand from the resources sector, particularly in nickel and gold.
The WA alumina sector also represented around 70 per cent of the state’s lime demand, Adbri said.
In its decision, Alcoa said: “In order to efficiently supply our three Western Australia refineries, Alcoa of Australia conducted a comprehensive process to evaluate potential suppliers for lime, a strategic material needed for alumina refining.
“This process lasted for around two years and considered numerous factors including product cost and quality.”