Dire warning: Aluminium smelters ‘on thin ice’

Rio Tinto’s NZ smelter closing could see operations at Boyne Island and Gladstone impacted.

Boyne Smelters Limited (BSL) is the largest aluminium smelter in Australia. Located approximately 20km south of Gladstone at Boyne Island on the Central Queensland coast. Supplied

OPERATIONS at the Boyne Island aluminium smelter, the QAL Gladstone alumina refinery and the Yarwun alumina refinery could be seriously impacted following news Rio Tinto is closing its Tiwai Point smelter in New Zealand.

Boyne Smelters Limited is the second largest aluminium smelter in Australia, employing 925 people in 2019, according to Rio Tinto data.

Aluminium smelters like Boyne are extremely reliant on electricity, Rio Tinto CEO JS Jacques has said, the price of power, plus low aluminium prices, results in the industry facing almost unprecedented challenges.

The New Zealand smelter is located on Tiwai Peninsula in Southland and the majority of the plant's alumina is supplied from Rio Tinto's Yarwun operation and Queensland Alumina Limited refineries.

The global mining giant announced the August 2021 closure of the smelter last week.

"In July 2020, we announced the planned wind-down of operations and eventual closure of NZ AS (New Zealand's Aluminium Smelter), scheduled for August 2021," Rio Tinto announced on its website.

"Our decision followed a strategic review and extensive discussions with a wide range of stakeholders, which showed the business is no longer viable given high energy costs and a challenging outlook for the aluminium industry."

 

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Before the closure announcement, Rio Tinto said New Zealand's Aluminium Smelter converted alumina into aluminium using renewable hydro-electricity, resulting in one of the lowest carbon footprints for an aluminium smelter in the world.

Rio Tinto CEO JS Jacques has previously saidsmelters like Boyne Island were on "thin ice" due to the high electricity costs and low aluminium prices.

"The ice is actually becoming slightly thinner," he said.

"The situation is very challenging - there is no doubt about it.

"There are some discussions with different parties in NSW, in Tasmania and in Queensland."

Mr Jacques said Rio Tinto was doing everything it could to optimise the performance of Pacific Aluminium assets like Boyne, which are under pressure.

"We need to find a viable and sustainable commercially acceptable solution," he said.

"It's probably in relation to power because those assets are very well run but the big element, the big issue they are facing is their cost, primarily around the power costs.

"We are in discussion at the federal and state government level, including with the appropriate utility provider, about how we could find ways to deal with those high energy costs.

"Discussions are underway and we are trying to progress them as quickly as we can in the challenging environment of COVID-19 … but we are not there yet."

It is understood Rio Tinto is currently assessing the impact on the QAL alumina refinery.