Rio Tinto invests $1.4-billion to expand Quebec aluminum manufacturing operations

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Rio Tinto PLC RTPPF is investing $1.4-billion to expand its aluminum manufacturing operations in Saguenay, Que., breathing new life into the industrial centre after years of uncertainty.

The Anglo-Australian mining giant said Monday it will build out a smelter that uses lower-carbon AP60 technology at its Complexe Jonquière site, adding 96 new pots to the existing 38 and increasing capacity to about 220,000 metric tonnes of primary aluminum per year. Pots are deep shells lined with carbon and insulating bricks in which aluminum is made through electrolysis.

“What we are trying to do here today is really about future-proofing” our business, Rio Tinto chief executive Jakob Stausholm said during a news conference in Saguenay. He called the investment the “most significant” by any western aluminum maker in more than a decade.

Aluminum manufacturers such as Rio, Alcoa Corp. and others are facing increasing pressure to curb their greenhouse gas emissions even as global demand for the metal is on the rise. The Canadian and Quebec governments are both trying to help industry players achieve this, investing, for example, in the ELYSIS technology pioneered by Rio and Alcoa, which eliminates carbon dioxide emissions altogether and replaces them with oxygen.

“This announcement brings us one step closer to the deployment of the first ELYSIS pots, which will make Quebec the leader in greenhouse gas-free aluminum production,” Pierre Fitzgibbon, Quebec’s Minister of Economy, Innovation and Energy, said in a statement.

The Quebec government said it would offer the company a loan worth $150-million for the project, which is forgivable if Rio Tinto maintains employment and investment levels. The company will pay an electricity rate to power the new facilities that’s similar to the so-called “L rate” paid by industrial users, the government said.

Quebec is the world’s fourth-largest jurisdiction for aluminum making after China, India and Russia. Roughly 90 per cent of Canada’s aluminum production and 70 per cent of North American output of the metal is located in the province.

Construction of the expanded operation will run over two and a half years and the smelter should be fully operational by the end of 2026, Rio Tinto said. The project will generate up to 1,000 jobs during the peak of construction, and another 100 jobs will be maintained once it’s complete, the company said.

Rio Tinto said it will gradually close the pot lines at its Arvida smelter, located on a neighbouring site, as it increases output for the AP60 facility. The company said it will add another 30,000 tonnes a year of new capacity with the launch of a previously-announced recycling facility at the Arvida site.

The life of the Arvida smelter and its nearly 70-year-old pot lines has been repeatedly extended in recent decades as the Quebec government reissued its operating permits, even though the smelter belches out pollutants that far exceed provincial norms. The facility’s current permit expires at the end of 2025.

Rio Tinto, which took over the smelter by way of its 2007 acquisition of Alcan Inc., has been pressed by local politicians, workers and environmentalists to replace it with a bigger, more modern and cleaner facility.

The company previously said it expected to make a decision this year, after repeatedly pushing back a verdict on its intentions. Among the things it was weighing was the cost of building new capacity in Quebec versus other places.

Alcan pledged to close the Arvida smelter and replace it with a modern smelter with twice the production capacity, operational by 2015. But Rio Tinto never made good on that promise, and Monday’s announcement falls significantly short of the 400,000 tonnes of annual output Alcan had originally envisioned for a new facility.

With reports from Konrad Yakabuski and Reuters.