Rio Tinto to cut 180 jobs at Yarwun refinery in Queensland in fresh blow to Future Made in Australia
Rio Tinto will slash 180 jobs and cut production by 40 per cent at its Queensland alumina refinery, as waste storage issues threaten the plant’s long-term future.
Rio Tinto will shed 180 jobs at its Yarwun alumina refinery in Queensland and downgrade output, dealing a fresh blow to the Albanese government’s flagship Future Made in Australia manufacturing policy.
The Simon Trott-led Rio has run out of room to store waste from the Yarwun operations and deemed it too expensive to build a new tailings dam.
Rio has enough land for a new tailings dam and could likely secure timely approvals, but has been deterred by rising construction costs and weak alumina prices. Analysts estimate it would cost up to $1bn to build a second dam at Yarwun.
The mining giant said on Tuesday it would slash production at the refinery near Gladstone by 40 per cent from October next year in a bid to extend the operation’s life until 2035.
Rio plans to redeploy as many of the 180 workers as possible.
The move will give the company breathing space to assess alternative ways to treat and store waste from Yarwun as the existing tailings dam nears capacity.
The latest blow to Rio’s Australian operations comes as it prepares to make a final call on the future of the Tomago aluminium smelter in NSW. More than a thousand workers at Tomago have been warned they could be out of a job by 2028 when a legacy coal power supply contract with AGL Energy expires.
The fate of Yarwun comes on the heels of Rio flagging it could shut the coal-fired Gladstone power station in 2029, six years earlier than scheduled.
The power station, the oldest and biggest of its kind in Queensland, supplies power to Rio’s nearby Boyne aluminium smelter. Rio said plans for the power station were unrelated to the future of Yarwun and also hosed down speculation of a link between cutting production at the refinery and the axe hanging over Tomago.
NRG, a minority partner in the power station alongside Rio, has reportedly been trying to find a new owner.
In justifying the production cuts and job losses, Rio said Yarwun’s tailings facility was expected to reach capacity by 2031 if it maintained production at current rates.
While Tomago is on death row because of high energy prices, Yarwun is on borrowed time unless there is a breakthrough in waste storage. Any closure of the refinery would come with decades of life left in Rio’s bauxite mining operations in Weipa.
Rio Aluminium Pacific operations managing director Armando Torres said it was too costly to build a new tailings dam at Yarwun.
“While we have extensively explored options to develop a second tailings facility for Yarwun over a number of years, the scale of investment required is substantial and not currently economically viable,” he said.
“Reducing production from October 2026 enables us to continue alumina production until 2035 and trial pathways to secure the longer-term future of Yarwun.
“We are committed to our alumina and aluminium operations in Gladstone and will work closely with employees, contractors and suppliers to manage this transition.”
Mr Torres said the decision was “difficult but necessary”.
The decision will reduce annual alumina production by around 1.2 million tonnes.
Rio said there would be no impact on customers or Rio’s other operations, with bauxite mines and aluminium smelters continuing to operate at full capacity.
Some of the alternative waste treatment and storage options being considered include neutralisation and centrifuge-based dry tailings.
Rio said the production and job cuts would not stop it pushing ahead with a hydrogen project at Yarwun partly funded by taxpayers through the Australian Renewable Energy Agency.
Yarwun currently employs about 725 people and produces around three million tonnes of alumina per year, used as a feedstock for Rio’s aluminium smelters and international customers.
Rio has told the federal government it is not interested in a short-term bailout for Tomago of the kind handed to other mineral processing operations in Australia this year. Those bailouts include a joint federal-Queensland $600m assistance package handed to Glencore to continue operating its Mount Isa copper smelter and much bigger taxpayer-funded rescue plan for the Whyalla steelworks.
Norway’s Norsk Hydro has already written down its 12.5 per cent stake in Tomago to zero as management continues talks with workers and unions scheduled to end on Friday.
Royal Bank of Canada analysts said Yarwun operated under the burden of high energy and labour costs, and a big investment in waste storage was uneconomic, particularly at current spot prices of $US318 a tonne for alumina.
The broker said the potential sale of Rio’s Pacific Aluminium business, which covers mines, refineries and smelters, was hard enough and would become “materially harder after the Yarwun curtailment, which suggests to us that Tomago may be the next asset to be curtailed.”
The Yarwun production cut follows Alcoa’s decision in September to permanently close its Kwinana alumina refinery in WA, and means Australia will have lost 3.4 million tonnes, or about 20 per cent, of alumina refining capacity by October next year.
RBC said tailings storage had emerged as a critical constraint in Western world alumina production.
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Originally published as Rio Tinto to cut 180 jobs at Yarwun refinery in Queensland in fresh blow to Future Made in Australia
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