Bloomberg News

Rio Tinto Reviewing Options for Bell Bay Aluminum Smelter

March 05, 2012

Rio Tinto Group (RIO), the world’s third- largest mining company, is reviewing its Bell Bay aluminum smelter in Australia because of rising costs and declines in prices for the lightweight metal.

“We are leaving no stone unturned as we try to make Bell Bay resilient in any market conditions,” Ray Mostogl, general manager at the Bell Bay operations said today in an e-mail, without detailing the options of the Tasmanian operation. “The aluminum sector in Australia is facing tough market conditions in the form of a high exchange rate, higher costs of production and low aluminum prices.”

Rio Tinto may shut the smelter to cut losses of as much as A$200,000 ($215,000) a day, threatening as many as 600 jobs, the Australian Financial Review reported today, without citing anyone. Rio Tinto, which swung to a second-half loss after writing down the value of its aluminum business by $8.9 billion, is joining global producers including United Co. Rusal and Alcoa Inc. (AA) in reviewing output after prices slumped 18 percent in 2011.

“Bell Bay is not immune from these tough conditions,” Mostogl said.

Rio shares fell 1.3 percent to A$65.09 at the close in Sydney today, compared with the 0.2 percent decline in the benchmark stock index.

Bell Bay is among 13 aluminum assets the company said in October will be put up for sale. The smelter produced 181,000 metric tons in 2011, out of Rio’s total aluminum output of 3.8 million tons, the company said in January.

Alcoa said last month it may cut production at its Point Henry smelter in Victoria state following a review of the operations due by the end of June.

To contact the reporter on this story: Soraya Permatasari in Melbourne at soraya@bloomberg.net

To contact the editors responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net; Andrew Hobbs at ahobbs4@bloomberg.net


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