Rio Tinto moves up Shawinigan smelter closure

TORONTO – Rio Tinto's Alcan division said on Wednesday it will shut down its aluminium smelter in Shawinigan, Quebec, by the end of November.

The company said it will immediately shut down 50 000 t of production and take the remaining 50 000 t of capacity offline by the end of November. Some 425 workers will be affected.

The smelter, commissioned in 1942, uses Soderberg technology, which is less energy efficient than newer ways of smelting aluminium.

Rio had said previously that, because of environmental regulations phasing out Soderberg technology in Quebec, its production lines would have to be shut down by the end of 2014 at the latest.

The company is set to report earnings before markets open in London on Thursday.

The closure will make little difference to the aluminium market, which is facing chronic oversupply of about ten-million tonnes. But it underscores the mounting pressure on aluminium producers with high cost, older technology.

Premiums paid by customers who need physical aluminium delivered, like manufacturers, have kept many smelters in the black as London Metal Exchange prices languish under $1 800/t, below the cost of production for a big portion of smelters worldwide.

But physical premiums are expected to fall because of a massive overhaul of the LME warehousing system that could come into effect next April.