Performance
Group projects
In light of changing demand dynamics in the aluminium industry and budgetary constraints, Rio Tinto Alcan has decided in 2008 to defer certain projects in its capital expenditure programme. It has reduced its capital expenditure budget for 2009 and plans to shut down certain of its smelters during 2009. Despite these reductions, the group will selectively continue to commit capital to certain high priority projects during 2009 and also remains prepared to rapidly recommence projects that have been deferred as and when market conditions improve.
Bauxite & Alumina
Weipa (Rio Tinto: 100 per cent)
A US$30 million feasibility study is under
way to develop a new bauxite operation to
the south of the existing Weipa bauxite
mine and port. If approved, Weipa's total
bauxite production capacity would increase
from 21 million tonnes in 2008 to 35 million
tonnes. The mine development would take
three years to construct.
Yarwun (Rio Tinto: 100 per cent)
Expansion of the Yarwun alumina refinery
in Gladstone, Queensland, is expected to
cost about US$1.8 billion with most of this
already committed. The expansion will
increase capacity to 3.4 million tonnes per
annum and is expected to more than double
annual production by 2011. First shipments
are expected towards the end of 2010.
Further to the group's ongoing commitment to reduce greenhouse gas emissions and improve energy efficiency, the refinery will incorporate a 160 megawatt gas fired cogeneration facility, thus making gas the primary fuel source. The facility is expected to reduce carbon dioxide emissions per tonne of alumina by 35 per cent relative to coal.
The expanded refinery is expected to operate in the second quartile of the industry cash cost curve. There remains potential for the refinery to be further expanded to over four million tonnes per annum.
Gove (Rio Tinto: 100 per cent)
The 1.8 million tonnes per annum expansion
of the Gove alumina refinery in Australia
continues, although technical challenges and
soft market conditions resulted in 2008
production of 2.3 million tonnes.
Associated infrastructure includes a deep water port, a township and an oil fired power station. The expansion cost is currently US$2.3 billion and is expected to bring the Gove refinery to a total capacity of 3.0 million tonnes per annum, making it one of the largest alumina refineries in the world. Following completion of the expansion, the refinery is expected to operate in the second quartile of the industry cash cost curve. Alternative energy sources (such as coal which could be backhauled by the bauxite ships) are currently being evaluated, which could result in a further reduction in cash operating costs.
São Luis - Alumar (Rio Tinto: 10 per cent)
A 2.1 million tonnes per annum expansion of
the Alumar refinery in Brazil (Rio Tinto Alcan
share 210,000 tonnes) is under way and
progress on construction is approximately
85 per cent advanced as of 31 December
2008. The project will cost an estimated
US$200 million (Rio Tinto's share). Alumar is
expected to be positioned in the first quartile
of the industry operating cost curve once
construction is completed in mid 2009.
Guinea (Rio Tinto: 50 per cent)
In May 2004, Rio Tinto Alcan and Alcoa
signed a memorandum of understanding for
the proposed development and construction
of an alumina refinery in the Boké region of
Guinea. The refinery, with a proposed initial
capacity of 1.7 million tonnes per annum,
would be built in the Kamsar area and
would receive its bauxite supply from the
Compagnie des Bauxites de Guinée, a joint
venture in which Rio Tinto Alcan has a
22.95 per cent indirect interest through its
participation in Halco Mining. A prefeasibility
study has already been completed
and the project is expected to be positioned
in the first quartile of the industry cost
curve.
Madagascar (Rio Tinto: 51 per cent)
Options for development of a greenfield
bauxite mine and alumina refinery in
Madagascar in partnership with a Malagasy
company are currently being considered.
The preliminary concept study has been
completed and this indicates potential for a
1.85 million tonnes per annum refinery with
expansion capability to 3.7 million tonnes
per annum. Rio Tinto Alcan will continue
with its studies for this project.
Primary Metal
Sohar (Rio Tinto: 20 per cent)
On 12 June 2008, Sohar Aluminium poured
the first metal at its newly constructed
smelter in Oman. The state of the art smelter
uses Rio Tinto Alcan's benchmark AP 36
technology - the most efficient and
environmentally friendly technology
commercially available. With an initial
capacity of 360,000 tonnes per annum, the
smelter is on track to reach full production
in the first quarter of 2009. In addition to its
equity interest in the project, Rio Tinto
Alcan assumes responsibility for technical
and operational support as well as sales and
marketing of all metal exported. The smelter
is expected to be positioned in the first
quartile of the industry cost curve. A second
potline of similar size is currently being
discussed among the joint venture partners.
Under the original agreement, Rio Tinto
Alcan has rights to up to 60 per cent of this
second potline.
Hydropower (Rio Tinto: 100 per cent)
On 28 October 2008, the group announced a
US$228 million investment in a new 225
megawatt high efficiency turbine at the
Shipshaw power station in Saguenay,
Quebec, Canada. The project is expected to
be completed in December 2012. The
Shipshaw power station is a major
component of Rio Tinto Alcan's extensive
hydroelectric network, which has a total
capacity of approximately 2,919 megawatts
in Quebec. Furthermore, on 30 January
2008, the group announced an investment
in its Lochaber, Scotland hydroelectric
facilities, which will include the installation
of new hydroelectric turbo generator.
Spent potlining facility (Rio Tinto: 100 per cent)
In June 2008, Rio Tinto Alcan inaugurated
its US$225 million facility for the treatment
of spent potlining. Located in Saguenay,
Quebec, this unique industrial scale pilot
plant is expected to have the capacity to
recycle approximately 80,000 tonnes of
spent potlining per year using proprietary
technology. Spent potlining is the residual
material generated in the de-lining of pots
in the smelting of aluminium, composed of
carbon and various inert elements. It is
typically pre-treated and put in landfill with
strict precautions, but the new recycling
process will enable spent potlining
components to be recycled, providing the
aluminium industry with a sustainable
solution for these by-products.
Kitimat (Rio Tinto: 100 per cent)
In October 2008, Rio Tinto announced an
additional sustaining investment of
US$300 million in the modernisation of the
Kitimat aluminium smelter in British
Columbia, Canada, bringing total
investments in the project to date to US$500
million. Full scale investment in the
modernisation project of about
US$2.5 billion has been delayed pending an
improvement in market conditions.
The modernisation project will replace outdated smelting methods with industry leading AP35+ prebake technology and increase current production from 245,000 tonnes per year to approximately 400,000 tonnes per year, representing expansion of more than 60 per cent. The facility will take increased advantage of available power from the Kemano hydroelectric facility, with a capacity of 896 megawatts, and leverage access to the Pacific Rim in terms of raw materials and metal markets. When completed, the smelter is expected to be positioned in the first quartile of the industry cost curve.
AP50 pilot plant, Quebec (Rio Tinto: 100 per cent)
In May 2008, Rio Tinto Alcan announced that
it is going forward with a pre-feasibility study
for two additional phases to the AP50 pilot
plant for which preparatory work has begun
in Saguenay, Quebec. The study is evaluating
the potential for an additional 140,000
tonnes of capacity to the pilot plant as well as
a possible subsequent expansion. This AP50
pilot plant will use the newest generation of
AP technology. It will be powered exclusively
by hydroelectricity. Representing a potential
investment of up to US$2.5 billion, the
expanded plant would also become the
platform for future AP technology
developments.
Alma (Rio Tinto: 100 per cent)
The Alma smelter in Quebec is one of
Rio Tinto Alcan's most modern and efficient
facilities. A potential expansion project,
announced in April 2008 and currently in
pre-feasibility, would add approximately
170,000 tonnes to the current production
of slightly more than 400,000 tonnes,
making Alma one of the largest smelters in
North America. The cost of the Alma
expansion is estimated at approximately
US$1 billion. The project has been deferred
due to the current economic downturn.
Cameroon (Rio Tinto: 47 per cent and 100 per cent)
In October 2005, Rio Tinto Alcan signed a
memorandum of understanding with the
Government of Cameroon, which was then
amended in November 2007, to provide for
the expansion of the Alucam smelter and
development and construction of a
greenfield aluminium smelter. Under the
agreed upon terms, Alucam, a joint venture
in which Rio Tinto Alcan owns a 47 per cent
interest, would build a 300 megawatt power
dam and a 200,000 tonne per year
expansion of the existing smelter. In
addition, a 930 megawatt power dam would be developed together with a 400,000 tonne
per year greenfield aluminium smelter by
Rio Tinto Alcan on a 100 per cent basis. The
expansion and the greenfield smelter are at
different stages of development, but when
completed both would be positioned in the
first half of the industry cost curve.
Rio Tinto Alcan and its joint venture partners are investing in two projects to modernise and extend the life of the Boyne Island aluminium smelter in Australia. The first project is related to the necessary replacement of two carbon baking furnaces, which supply anodes to two of the smelter's reduction lines. The second project is related to the replacement of mobile cranes and upgrade of associated runways on two reduction lines. Both projects are high priority end of life replacements and are required in order for the reduction lines to continue operating. The crane and runway refurbishment project is also required in order to meet current safety standards and statutory regulations.
Coega (Rio Tinto: 80 per cent)
As a result of power supply shortages in
South Africa, the smelter project at Coega
has been delayed pending confirmation that
ESKOM, South Africa's national power utility,
will be able to supply electricity under the
Electricity Supply Agreement signed in
November 2006. The project team has been
reduced, with small teams retained in Port
Elizabeth and Johannesburg.
Saudi Arabia
In December 2008, Rio Tinto Alcan and
Ma'aden announced that their relationship
will be one of cooperation rather than one of
equity partnership. The group is in
discussions with Ma'aden to potentially
provide technology support for the smelter
project as well as general advice and support.
Although Rio Tinto Alcan will not be an
equity partner at this stage of the project, the
parties have agreed to consider the
possibility of participation at a later date.
Sarawak (Rio Tinto: 60 per cent)
In August 2007, Rio Tinto Alcan and Cahya
Mata Sarawak Berhad signed a heads of
agreement for the proposed development of
a smelter in the State of Sarawak, Malaysia.
Pre-feasibility work has been undertaken
and joint venture agreements are being
finalised. Under the joint venture, detailed
feasibility studies on the design,
engineering, construction, commissioning
and operation of a smelter with an initial
capacity of 720,000 tonnes will be
undertaken. The smelter is expected to have
the capability to be expanded to 1.5 million
tonnes per annum. When completed, the
smelter is expected to be positioned in the
first quartile of the industry cost curve.
