Rio’s Aluminium interests crushed by COVID-19
ELECTRICITY prices are the key to Rio Tinto’s Gladstone region aluminium interests as the mining giant attempts to recover from the financially crushing blows delivered by the COVID-19 pandemic.
In it’s half-yearly results released yesterday, Rio Tinto wrote down the value of its Pacific Aluminium assets, including Boyne Smelters Limited BSL, by $472 million.
BSL employs 925 mainly local workers and processes more than half a million tonnes of aluminium annually.
Chief Executive Jean-Sebastien Jacques said last night aluminium markets had been very challenged by COVID-19 and were under pressure, which was reflected in the write down.
Ms Jacques was supported by chief financial officer Jakob Stausholm, who also reflected on the write down.
“It’s clear to say that COVID-19 has particularly affected two of our markets, namely our aluminium business and our diamond business, and we have reflected that in our valuation and that is why we have written it down,” Mr Stausholm said.
“From a strategic standpoint, if I step back, the aluminium markets globally are very challenged,” Mr Jacques said.
“If you look at any kind of historical trend, the prices are pretty low.
“The reason being is the construction industry, automotive industry – although we start to see some restarts in some geographies – I think is very challenged in the context of COVID.”
Despite these challenges, Mr Jacques said Rio’s Australian aluminium assets were performing well.
“Our assets in Australia are good assets,” he said.
“The performance, if you put aside the energy question, the performance of those assets on all other metrics, they are performing very, very well and we should be very proud of what they are achieving, including on safety.”
Negotiations have been ongoing over the critical issue of electricity to continued aluminium production by BSL, Mr Jacques said, and the entire industry in Australia.
“There is no doubt whatsoever, we are having a lot of private conversations for all our smelters in Australia,” he said.
“Those are challenging conversations, there is no doubt about it, and we are working hard to find a solution.
“At a high level, what we want to do is to find a way to secure a power supply which is globally competitive, in order to make sure we maintain those assets and continue to be in a position to be able to continue to invest in those assets in the short, medium and long term.”
It is hoped the issues with Australian electricity prices can be resolved, Mr Jacques said, within 12 months.
“The team is working very hard to make sure we find a solution as quickly as we can for the benefit of all parties involved,” he said.
“I can’t make any forecast on how long it will take but we are working hard on this one.”