Second half 2011 underlying earnings for the Group’s aluminium operations (including Rio Tinto Alcan, Pacific Aluminium and Other) are expected to be slightly worse than breakeven due to difficult market conditions and the impact of various one off costs, including additional closure costs at Lynemouth of approximately USD 40 million.
Rio Tinto share of production
Bauxite
| Item | FY '12 LF | FY '12 PF |
| Sales | 134 | 138 |
| Operating | 1.4 | 4.7 |
| Recurring | 500 mln | 3 |
| Net | 500 mln | 2.6 |
(In 000 tonnes)
Alumina
| | Q4 11 | vs Q4 10 | vs Q3 11 | FY 11 | vs FY 10 |
| Rio Tinto Alcan | 1,569 | 2% | 7% | 5,846 | -4% |
| Pacific Aluminium / Other | 786 | 4% | 3% | 3,101 | 4% |
(In 000 tonnes)
Aluminium
| | Q4 11 | vs Q4 10 | vs Q3 11 | FY 11 | vs FY 10 |
| Rio Tinto Alcan | 600 | -1% | 0% | 2,386 | 0% |
| Pacific Aluminium / Other | 361 | 1% | -1% | 1,438 | 3% |
(In 000 tonnes)
On 17 October 2011, Rio Tinto announced that it was streamlining its Aluminium product group following a strategic review. Six Australian and New Zealand assets have been transferred into Pacific Aluminium and seven other non-core assets have now also been transferred out of Rio Tinto Alcan. These assets are managed and reported separately from Rio Tinto Alcan while the Group investigates divestment options.
Bauxite and alumina
Rio Tinto Alcan’s bauxite production was 13 per cent higher than the fourth quarter of 2010, and nine per cent higher year on year, driven by increased third party demand, notably at Weipa.
Rio Tinto Alcan’s alumina production was seven per cent higher than the third quarter and continued its gradual recovery from the abnormally heavy rains in early 2011, which primarily impacted Queensland Alumina.
Pacific Aluminium’s Gove operation set annual records for both bauxite and alumina production.
Aluminium
Rio Tinto Alcan’s aluminium production was broadly consistent across all periods. Production was higher year on year at Laterrière following a transformer failure in July 2010. This was partly offset by the loss of production following two transformer incidents at the Dunkerque smelter in France in May and August 2011, and lower production at Kitimat in preparation for the modernisation project.
On December 1st 2011, Rio Tinto announced an additional capital investment of USD 2.7 billion to modernise its aluminium smelter in Kitimat, British Columbia, Canada. This new investment will allow for completion of the USD 3.3 billion project in 2014 and increase the smelter’s current production capacity by more than 48 per cent to approximately 420,000 tonnes per year.
All four Pacific Aluminium smelters reported quarterly and annual production records.
Reductions in capacity
On November 16th 2011, Rio Tinto announced its intention to close the Lynemouth aluminium smelter, subject to the completion of a 90 day consultation process with employee and union representatives. A power failure in December at Lynemouth resulted in a loss of production from one entire potline and one quarter of the second potline. This equates to a loss of annualised production capacity of 120,000 tonnes.
A circuit breaker failure at the Shawinigan smelter at the end of 2011 reduced capacity at the plant by 50 per cent to 50,000 tonnes.
On January 1st 2012, Rio Tinto Alcan announced that it had initiated a lockout at the Alma smelter, and shut down two thirds (292,000 tonnes) of the smelter’s capacity to protect the safety and integrity of aluminium operations after labour negotiations failed to reach agreement.
As a consequence of these actions, a total of 462,000 tonnes of annual capacity have been closed or idled across Rio Tinto’s aluminium operations.
