(Bloomberg) -- Alcoa Corp. will restart aluminum production lines in Australia mothballed since 2009 as the top U.S. supplier's shares surge on strengthening demand for the material.
The Portland joint venture in southern Victoria state will fire up 35,000 tons a year of additional capacity, with first production from the reopened lines expected in the third quarter of next year, Pittsburgh-based Alcoa said in a statement.
A revival of the long-struggling operation is another signal that aluminum's massive rally is finally convincing producers to bring more capacity on line. Alcoa and South32 Ltd. in September announced plans to restart the idled Alumar complex in Brazil.
Alcoa's stock has more than doubled this year as aluminum prices surged through last month, fueled by supply chain disruptions, a global shortage and rising demand for the material used in cars to beer cans and MacBooks. While the metal has declined in recent weeks, analysts forecast a strong long-term outlook on lower output from China, the world's largest producer, and the material's role in the energy transition.
Read more: Aluminum Whiplashed in Weeks From Scorching Rally to Bear Market
Restarting the Portland site will cost about $28 million, with Alcoa's share amounting to $9 million, according to the statement. Alcoa's Australian joint venture with Alumina Ltd. owns 55% of the smelter, with CITIC Nominees Pty. and Marubeni Aluminium Australia Pty. holding the remainder.
AGL Energy Ltd. agreed an additional contract to supply 72 megawatts of electricity from July 2022 to 2026 as part of the restart plan, the supplier said in a separate statement.
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