Alumina illuminated

Peter Brigg turns the spotlight onto Hydro Aluminium – and on the mammoth deal it has signed to buy millions of tonnes of Rio Tinto alumina over the next 25 years.

Rio Tinto Aluminium has hundreds of customers across the globe, ranging from huge international concerns purchasing bulk cargoes of bauxite to be processed into alumina, through to local companies buying modest quantities of primary aluminium products to fabricate into everything from kitchen foil to engine blocks.

Each of these customers is unique and, to Rio Tinto Aluminium, important in its own right. But among the company's vast array of supply contracts – long and short term, large and small – one is especially notable, not just because of the tonnages involved but also because of the duration of the agreement.

That contract is the one signed in June 2003 between Comalco, Rio Tinto's wholly owned aluminium subsidiary in Australia, and Hydro Aluminium, part of Norway's Hydro group. Described at the time as one of the biggest alumina deals in history, the contract calls for Comalco to supply Hydro Aluminium with 500,000 tonnes of alumina a year for the next 25 years (after an initial start-up quantity of 300,000 tonnes in year one).

Now the contract and the 18 months of rigorous negotiations that went into it are a reality: in the first three months of 2005 the deal has become "live". The first 30,000 tonne shipment of alumina under the contract left Comalco's new refinery at Gladstone in Queensland early in February. And at roughly monthly intervals this year, one similarly sized cargo will be shipped either from Comalco's refinery or from Queensland Alumina Limited (Comalco: 39%), a refinery also in Gladstone, to Hydro's smelter system in Australia and elsewhere. In 2006 and subsequent years the pace of shipments will pick up still further.