The proposed plans come after the company failed to secure buyer for the power station and coal mine.
The Anglesea power plant used to serve 40% needs of Alcoa’s aluminium smelter in Point Henry that was closed in August last year. The 46-year-old site has since supplied to the National Electricity Market.
Alcoa of Australia managing director Alan Cransberg said: "Our key concern now is for our 85 employees who have done a great job in continuing to run the operation during this period of uncertainty.
"Alcoa has been a proud member of the Anglesea community for more than 46 years, and our focus is in supporting our employees and their families, our contractors, suppliers and community partners through this transition."
The company expects the closure to result in restructuring-related charges of up to $35m this year with 80% of it expected to be recorded in the second quarter.
Alcoa of Australia is a joint venture of Alcoa and Alumina with 60% and 40% stakes, respectively.
