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Rio Tinto to suspend alumina production at Gove

29 november 2013, 11:36
0
Rio Tinto Chief Executive Sam Walsh. ©Reuters/David Gray
Rio Tinto Chief Executive Sam Walsh. ©Reuters/David Gray
Mining giant Rio Tinto said Friday it will suspend alumina production at its Gove refinery in northern Australia because it is no longer a viable business, AFP reports.

Low alumina prices, a high Australian dollar and substantial after-tax losses for the refinery were key factors in the decision, the company said in an announcement, which did not put a figure on job losses.

"Our aluminium business is facing challenging market conditions and tough decisions are needed," said Rio Tinto chief executive Sam Walsh.

"It has been an extremely difficult decision and we recognise it will have a significant impact on our employees, the local community and the Northern Territory."

The Anglo-Australian miner said the federal and territory governments had worked with it to try to secure a long-term future for the refinery, which produces 2.7 million tons of alumina per annum for smelting into aluminium and employs 1,500 workers.

"All practical scenarios were considered in an attempt to make this work, however it has not been possible to find a sustainable solution," the company said in a statement.

The decision means Rio will focus on operations related to bauxite, a burnished red ore with high aluminium oxide content, at the site in remote Arnhem Land in the Northern Territory.

"Establishing a long-term plan for the bauxite operation and its employees will be the key to retaining a sustainable business in the local area," it said, adding that a priority would be establishing long-term certainty for the bauxite operation and its 350 employees and contractors.

Rio's operation is key for the town of Nhulunbuy and its 4,000 population, and Prime Minister Tony Abbott said the decision was "very bad news for the workers there".

"The people who I feel very sorry for are those who have bought homes and businesses in Gove on the expectation of a very vibrant, ongoing, continuing economy and who are now in a very difficult position," he told reporters.

"And I think these are the people who Rio does have a moral debt to, if not necessarily a legal debt."

Rio said there would be no immediate change to refinery operations and it expected the process of suspending production would begin in the first quarter of 2014 and be phased in during the year.

The company said in October that it was making steady inroads on cost-cutting after posting a 71 percent slump in profits in the six months to June owing to softer commodity prices and slowing demand from key market China.

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