Rio Tinto’s revamped Canadian aluminium smelter goes on stream

Anglo-Australian mining giant Rio Tinto Plc has begun operation of its upgraded aluminium smelter in Canada, targeting a sizeable market share in North America and Asia-Pacific.

The extensive modernisation of the Kitimat smelter in British Columbia has been completed at a cost of $4.8 billion, which is expected to raise the production capacity of the plant by almost 50 per cent to reach an annual output rate of 420,000 tonnes.

According to the plant manager Gaby Poirier, full production will not be attained until next year although shipments will commence soon.

''We are at the start of a new era for the smelter where we will become a supplier of high-quality, low-carbon footprint aluminum to the Pacific Rim,'' he said.

With augmented production, the company expects to enter the North American and Asia-Pacific markets, taking on US rival Alcoa Inc and others.

Rio Aluminium chief executive Alf Barrios said in a statement, ''The modernisation of Kitimat will fundamentally transform its performance, moving it from the fourth quartile to the first decile of the industry cost curve.''

''At full production, Kitimat will be one of the most efficient, greenest and lowest-cost smelters in the world,'' he added.

The revamped smelter is powered by Rio Tinto's wholly-owned power facility and uses the company's proprietary AP40 smelting technology which will effectively halve the smelter's overall emissions, the company said.

''Positioned in British Columbia on the west coast of Canada, Kitimat is well placed to serve rapidly growing demand for aluminium in the Asia-Pacific region and to serve the North American market,'' Barrios said.

The project created about 3,600 construction jobs and will have 1,000 permanent positions, about half of what it had in early days.

The new plant will cut overall emissions of hydrocarbons, fluorides and greenhouse gases, but sulphur-dioxide emissions are expected to go up, according to the company website.

Although the environment ministry has approved the higher sulphur-dioxide emissions, some local residents have appealed the case on potential health and environmental concerns.

In 2014, Rio Tinto's aluminium business accounted of over 13 per cent of its $9.3-billion underlying earnings, iron ore being the company's main profit driver. Rio acquired Alcan in 2008 to form Rio Tinto Alcan.

Global aluminum producers are hit by sagging prices and higher exports from China. Prices for the commodity have fallen over 20 per cent from their November highs of $2,098 a tonne to around $1,660 a tonne.

According to Bank of America Merrill Lynch forecast, the average price of the metal is expected to be $1,742 per tonne this year and $1,788 in 2016.

China's Chalco and Russia's Rusal are the world's top producers of the light metal which produced 3.8 million tonnes and 3.6 million respectively in 2014. Rio Tinto's overall production target this year is 3.3 million tonnes.

In April, Rusal said it may idle 200,000 tonne smelting capacity while Alcoa also said it would review its 500,000 production capacity.