Rio Tinto says it may cut operations or shut down its aluminium smelter in Iceland as it struggles to generate profits at the site because of tough market conditions and high power costs.
Rio said on Wednesday the Icelandic Aluminium Company smelter is expected to remain unprofitable in the short to medium term, and production has already been reduced to 85 per cent of the smelter’s capacity.
“We have worked intensively to improve ISAL’s performance. However it is currently unprofitable and cannot compete in the challenging market conditions due to its high power costs,” Rio Tinto Aluminium Chief Executive Alf Barrios said in a statement.
Rio said it will complete a strategic review of the smelter in the first half of 2020 and continue talks with the Iceland government and power provider Landsvirkjun to explore options for a return to profitability.
Last year, the global miner initiated a similar review for New Zealand’s Aluminium Smelter, which is expected to be completed in the first quarter of 2020.
The aluminium market is struggling with a lack of demand and a downturn in sales to the automotive sector.
Meanwhile, the company said in relation to its Oyu Tolgoi copper and gold mine in Mongolia on Wednesday that there had been a slowdown in concentrate shipments crossing the border with China due to coronavirus containment efforts.
“We have advised customers that we are engaging with authorities who are working on re-establishing regular and safe border crossings,” a spokesman for the miner said in an email.