Rio Tinto Says Australia’s Tomago Aluminum Smelter May Close
(Bloomberg) -- Rio Tinto Group said Australia’s biggest aluminum smelter, the Tomago project in New South Wales state, may close as high energy costs continue to hit profits.
A consultation is underway with the more than 1,000 employees at the plant, and no definitive decision has been made yet, Rio said in a statement Tuesday. Tomago is the biggest energy consumer in the state.
The London-based miner owns just over half of Tomago in a venture with Gove Aluminium Finance Ltd. and Norsk Hydro ASA. The consortium has sought support from Australia’s government while attempting to find new energy supply for the power-intensive project once its current contract with AGL Energy Ltd. expires at the end of 2028.
“Finding competitively priced energy remains the central challenge, with electricity accounting for more than 40% of Tomago Aluminium’s current operating costs,” Rio said.
Tomago has operated for more than four decades and is part of Rio’s Pacific Aluminium business. The Miner has looked to divest many of the assets, including Tomago, or spin them into new entities as they account for a huge chunk of the company’s global emissions, and many have struggled to deliver returns.
Under Chief Executive Officer Simon Trott, who took the helm in July, the aluminum business has been merged with the company’s lithium portfolio.
Over the past decade, China’s rapid expansion throughout the metals supply chain has fueled fierce global competition, leading to the closure of many smelters worldwide — including several in Australia. Soaring energy costs have further tightened margins.
That has led Australian local and federal governments to step in to support jobs. This year they have provided bailouts to Glencore Plc for its Mount Isa copper operations and Trafigura Group subsidiary Nyrstar Australia for its lead and zinc smelters.
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