Alumina industry operating at a loss, Alcan

Alumina and aluminium decline takes it toll

Rio Tinto Alcan will slow the construction of the Yarwun alumina refinery expansion in Gladstone and curtail annual bauxite production at its Weipa mine to 15 million tonnes (from 19.4 million tonnes in 2008) due to the sharp fall in alumina and aluminium demand and prices in recent months.

Announcing the decision, Rio Tinto Alcan Bauxite and Alumina president Steve Hodgson said the depressed state of the market and a sharp cutback in demand made further tough decisions necessary.

Hodgson said that the current demand for aluminium remained poor and despite major industry wide production cutbacks, stocks continue to increase.

“Even with alumina industry capacity cuts equivalent to 21 million tonnes per year since the beginning of the crisis, including cuts of 12 million tonnes made since January, there is still little improvement in the alumina price.

“At current prices around 70% of the industry is currently operating at a financial loss,” Hodgson said.

Work on the Yarwun alumina refinery expansion will be slowed to reduce the rate of capital expenditure. The change to the construction schedule will result in a revised completion date in the second half of 2012.

The decisions will result in the loss of around 100 permanent roles at Weipa and approximately 570 contractor roles in Gladstone.

Additionally, about 35 permanent roles will be lost from the Yarwun refinery and at Boyne Smelters also in Gladstone.

To keep up to date with Australian Mining, subscribe to our free email newsletters delivered straight to your inbox. Click here.