Performance
Bauxite & alumina operations
Bauxite
At 31 December 2008, Rio Tinto Alcan's bauxite production was 35.0 million tonnes per annum, up from 31.4 million tonnes in 2007 (on a 12 month comparative basis). Rio Tinto produces bauxite from its two wholly owned bauxite mines at Weipa and Gove in Australia and from operating bauxite mines located in Brazil, Ghana and Guinea, in which it holds interests.
The bauxite business' strengths include:
- The largest reserves and resources in the industry, which are expected to ensure sufficient bauxite supply to sustain Rio Tinto Alcan's long term growth strategy.
- Annual production capacity that supports both internal alumina production and significant sales to third parties.
- Scope for expansion of annual production in the long term.
- Interests in three of the four largest bauxite mines in the world (Weipa, Porto Trombetas and Sangaredi), located in the top three bauxite reserve countries (Australia, Brazil and Guinea).
- Regional concentration of reserves (Weipa, Ely, Gove), which is expected to provide the basis for future optimisation opportunities based on their geographical proximity.
The Weipa mine, located at Cape York, Australia, contains reserves of 1,736 million tonnes and resources of 1,603 million tonnes (including the adjacent Ely mining lease). The mine has an annual production capacity of 21.0 million tonnes and is Rio Tinto Alcan's largest bauxite mine. In 2008, the mine further increased its production capacity by 2.8 million tonnes from 18.2 million tonnes in 2007. Bauxite from Weipa is either sold to third parties or shipped to Gladstone for processing at the Yarwun and the 80 per cent owned Queensland Alumina Limited (QAL) refineries.
The Gove mine in the Northern Territory, co-located with the Gove alumina refinery, contains bauxite reserves of 175 million tonnes and resources of 46 million tonnes as at 31 December 2008, with an annual production capacity of over 6.0 million tonnes. The Gove refinery consumes most of the mine's output, although some output is sold to third parties.
Outside Australia, the group owns 12 per cent of the Porto Trombetas bauxite mine in Brazil. Its share of reserves is 25 million tonnes and share of resources is 48 million tonnes as at 31 December 2008, amounting to a share of annual production capacity of 2.0 million tonnes. Rio Tinto also owns 22.95 per cent of the Sangaredi mine in Guinea and 80 per cent of the Awaso mine in Ghana, constituting shares of annual production capacity of 6.0 million tonnes and 0.6 million tonnes, respectively.
Alumina
Rio Tinto Alcan's share of alumina production capacity was 9.0 million tonnes at the end of 2008. Alumina production includes both smelter grade and specialty aluminas, with a wide range of products from hydrate to calcined, fused, activated and tabular aluminas. These serve many industrial purposes in chemical, refractory, ceramics, tiles, glass and abrasives applications.
Commitments to the specialty alumina market are balanced with the group's internal demand for smelter grade alumina from Primary Metal operations. Internal demand reduces Rio Tinto Alcan's exposure to adverse developments in alumina pricing and assists in the management of supply and demand during cyclical fluctuations. Additional strengths of the alumina business include:
- Recognised technological capability backed by a strong research and development team.
- Deployment of leading technology in expansion projects under way or planned at Gove and Yarwun.
- Modern, "best in class" assets with expansion optionality.
- Procurement synergies through ownership of the north eastern Australia alumina refineries at Gove, Yarwun and QAL. Their proximity to the Weipa and Gove bauxite mines provides opportunities for operational optimisation as experience, best practices and supply chain benefits are shared.
The Gove refinery is a wholly owned two million tonnes per annum plant which is in the final stages of commissioning of its 1.8 million tonnes per annum expansion. The Gove refinery is located next to the Gove bauxite mine.
The Yarwun refinery, located in Gladstone, has a current nameplate capacity of 1.4 million tonnes per annum and is undergoing expansion to increase capacity to 3.4 million tonnes per annum. Significant capital expenditure commitments had already been made to the expansion before the start of the downturn.
QAL, located in Gladstone, Australia, is one of the world's largest alumina refineries with a capacity of just under four million tonnes per annum. QAL operates in the second quartile of the industry cash cost curve and has opportunities for further development.
The ten per cent owned São Luis (also known as Alumar) refinery in Brazil, has a current capacity of 1.5 million tonnes per annum.
In addition, Rio Tinto Alcan also owns the 1.5 million tonnes per annum Jonquière (Vaudreuil) alumina refinery in Quebec, Canada and the 0.6 million tonnes per annum Gardanne refinery in France, which produces mainly specialty alumina and small quantities of smelter grade alumina (below 50,000 tonnes per annum). Both refineries operate in the fourth quartile of the industry cash cost curve. Other wholly owned refinery operations relate to specialty alumina, in which four smaller plants combine with Gardanne and part of Jonquière (Vaudreuil) to provide around 750,000 tonnes of annual production capacity.
As part of its integration with former Alcan operations, Rio Tinto Alcan has established its global Bauxite and Alumina headquarters in Brisbane, Australia.
2008 operating performance
Rio Tinto Alcan's share of bauxite production was 35.0 million tonnes in 2008, which represents an increase of 12.1 per cent compared to 2007 on a 12 month comparable basis including former Alcan and Rio Tinto operations combined. This increase reflects higher capacity as well as an increase in both internal requirements and external demand in the first nine months of 2008. Demand contracted significantly during the final quarter of 2008, as a result of the global economic slowdown. Two new post Panamax bulk ore carriers were acquired to support global bauxite shipping requirements.
Production of bauxite at Weipa in 2008 was 20.0 million tonnes (beneficiated and calcined), 9.9 per cent higher than in 2007. Weipa bauxite shipments rose by 5.0 per cent to 19.5 million tonnes.
Rio Tinto Alcan's smelter grade alumina production for 2008 was 5.9 per cent higher than in 2007 at 8.3 million tonnes on a 12 month comparable basis including former Alcan and Rio Tinto operations combined. The specialty alumina business produced 759,000 tonnes of alumina on a 12 month comparable basis including former Alcan and Rio Tinto operations combined.
A temporary blockage in the residue pipeline at the Yarwun refinery during the third quarter resulted in curtailed operations and 113,000 tonnes of lost production. Essential maintenance was conducted during this period and full capacity was restored in August.
At Gove, slower commissioning led to a revision of the 2008 production target to 2.3 million tonnes. A detailed programme of work completed in 2008 identified a series of debottlenecking projects that provide a pathway for further increases in the capacity of the refinery.
