Rio Tinto’s (NYSE: RIO; LSE: RIO) aluminum subsidiary Rio Tinto Alcan is closing its aluminum smelter in Shawinigan, Que., in two quick stages so that it can remove 100,000 tonnes per year of aluminum smelting capacity by the end of this November.
“This decision follows a strategic review that explored every option for continuing smelting operations. Due to dated technology and continued weakness in aluminum prices, Shawinigan’s primary aluminium capacity is not currently sustainable,” said Arnaud Soirat, CEO of Rio Tinto Alcan Primary Metal, in a statement.
Commissioned in 1942, and still operating with old Soderberg technology, the smelter had been due to close at the end of next year owing to tightening environmental regulations, but the slump in aluminum prices and chronic overcapacity in aluminum smelting and refining worldwide apparently sped up Rio Tinto’s plans.
Some 425 positions will be eliminated overall, with 60 positions retained at a casting house until that too is shut down in December 2014. All employees will receive full salary for a year under their current union collective agreement, and will receive retirement options, retraining or job-search help where appropriate.
Rio Tinto had already chopped a planned 568,000 tonnes of capacity from its global aluminum business, or 13%, in response to aluminum prices that have fallen by a third over the last two years. This includes next year’s closing of the 176,000-tonne Arvida smelter in Saguenay–Lac-Saint-Jean, Que., which is being offset by another 60,000 tonnes of new capacity in Quebec using modern, cleaner AP60 technology.
Rio Tinto Alcan has 5,000 employees in Quebec.
In Kitimat, B.C., Rio Tinto Alcan is boosting aluminum smelting capacity from 187,000 to 420,000 tonnes.