Rio Tinto aluminium division to renew focus on bauxite

The Australian reported that RIO Tinto has declared it will focus its aluminium division on its vast bauxite resources, with a big expansion of its Weipa operations under consideration and its low cost, hydro powered smelters in Quebec.

The renewed focus raises questions around the big miner’s local aluminium smelters, which Rio unsuccessfully investigated floating last year under the Pacific Aluminium moniker.

Rio’s bauxite assets are focused in Australia, where export expansions at Gove in the Northern Territory and Weipa in Queensland are being looked at. The miner’s lowest-cost smelters were bought in the debt-funded USD 37 billion Alcan acquisition in 2007, which caused Rio big problems when credit markets froze in the global financial crisis.

Mr Barrios indicated that the company could try to sell aluminium capacity that is not in the least expensive quartile of global operations if they can’t shape up. For those 20% (of Rio’s capacity) which aren’t in the first quartile, the pathway has been defined to try to get there in the next few months. We will make a decision on the way forward for those that do not meet the guidance.”

Mr Barrios assured investors he was looking for value accretive options. We are not looking to divest these assets if that destroys value for our shareholders. The more expensive smelters that had been earmarked for a spin off include the Boyne Smelter at Gladstone, the Tomago smelter in the Hunter Valley and the Bell Bay smelter in Tasmania.

He said that Rio was investigating a first-up development that could export 22.8 million tonnes of bauxite a year, with a secondary expansion to bring that to 50 million tonnes.

Mr Sam Walsh CEO of Rio said that “There could be scope for changes to this and did not rule out doing the big expansion in one go. We are looking at every option we have in terms of optimising the project. The project is expected to go to the board for approval next year.”

Mr Walsh raised the spectre of the ill-fated Alcan acquisition, which many believe was done as a defensive move against a looming bid from BHP Billiton. We are not looking at any major M&A; we are not looking at doing anything stupid, we are looking at playing our game plan.

Copyright and Exemption Declaration :¢ÙAll articles, pictures and videos that are marked with "China Aluminum Network" on this website are copyright and belong to China Aluminium Network (www.alu.com.cn). When transshipment, any media, website or individual must list the source from "China Aluminium Network (www.alu.com.cn)". We seek legal actions against anyone that disobey this. ¢ÚArticles that marked as copy from others are for transferring more information to readers, do not represent or endorse their opinions or accuracy and reliability. When other media, website or individuals copy from our website, must keep the source. Anyone that changes the articles' sources will hold the responsibilities for copyright and law problems. We also seek legal actions against anyone that disobey this. ¢ÛIf any articles copied by our website concern the copyright and other problems, please contact us within one week.