The US-listed company on Tuesday said operating costs, current bauxite grades and market conditions were behind the decision to close the 60-year-old facility.
Production will be phased out at the Kwinana refinery during the second quarter of the year, with about 800 employees and 250 contractors likely to be affected.
The workforce will be reduced to about 250 in the third quarter when all alumina production will cease.Â
Some processes will continue until about the third quarter of 2025, when employee numbers will further reduce to about 50, saving the company about $100 million ($US70 million).
The federal government expressed its disappointment in the decision and said it expected the company to support those affected.
Minister for Resources and Northern Australia Madeleine King said the closure and job losses would have a ripple effect across the community.
"We understand that Alcoa is faced with difficult considerations, including the age of the facility, a constrained location and challenging market conditions, however, the closure of such a longstanding operation is disheartening for everyone involved," she said.
"I expect that Alcoa will do everything it can to ensure workers affected and their families receive all the support they need during this difficult time, and I will hold them to account on this."
Premier Roger Cook said it would be a difficult day for Alcoa's workers.
"This is a very disappointing outcome, and Alcoa needs to do everything it can to support its workforce through this transition," he said in a statement.
"We will continue to work with Alcoa to ensure its other operations in Western Australia - including its Pinjarra and Wagerup refineries - support local jobs into the future."
Alcoa's executive vice president and chief operations officer Matt Reed said it was aware the decision to close the facility would have an impact on the community.
"We deeply appreciate the commitment and support of our many loyal employees, contractors, and suppliers at our Kwinana refinery, which has made a major contribution to WA's economic development over the last 60 years of continual operation," he said.
The company said the refinery had an annual production capacity of 2.2 million metric tonnes but had only been operating at about 80 per cent of that since January 2023.
Mr Reed said Alcoa would support its employees as they transitioned to other jobs in and outside the company.
"We remain committed to WA in the long term and will continue to assess options for the refinery, monitoring the factors that have led to the curtailment decision," he said.
The refinery recorded a net loss (pre-tax and non-controlling interest) of about $US130 million ($A194 million) in 2023.
Alcoa expects its financial woes to improve by about $US70 million ($A100 million) from the third quarter of 2024 due to the closure.
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