Rio Tinto’s century-old Quebec aluminum smelter is living on borrowed time

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Canada’s aluminum industry got its start in the Quebec town that U.S. industrialist Arthur Vining Davis built in the 1920s. A century later, Arvida – its name derived from the first letters of its founder’s name – is living on borrowed time.

The life of the Arvida aluminum smelter that opened in 1926, now owned by Rio Tinto PLC RTPPF, 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. For Quebec, it has all been about protecting hundreds of jobs in the remote Saguenay region; for Rio Tinto, the plant has remained a profitable asset that has paid for itself several times over.

Arivda, the town, has rich history in more ways than one. A model of early 20th-century urban planning, it was the envy of much of Canada during its early years. The town was amalgamated into its neighbour, Jonquière, in 1975 and rolled into the City of Saguenay in 2002.

The Arvida smelter’s current permit expires at the end of 2025. Rio Tinto is under pressure from local politicians, workers and environmentalists to replace it with a bigger, more modern and cleaner facility. The Anglo-Australian mining colossus expects to make a decision this year, though it has repeatedly delayed a decision in the past.

“With the Arvida smelter closure scheduled in 2025, Rio Tinto is working hard to manage the transition in a way that minimizes impacts on our work force, the community and our customers,” Ivan Vella, the chief executive of Rio Tinto’s aluminum operations, said in a statement provided to The Globe and Mail.

Stakeholders complain that Rio Tinto, which acquired the Arvida smelter in its 2007 takeover of Canadian-based Alcan Inc., has a commitment problem. In 2006, Alcan announced plans to close the Arvida smelter and replace it with a modern smelter with twice the production capacity by 2015. But Alcan’s new foreign owners never made good on that promise.

Instead, Rio Tinto has repeatedly sought and obtained extensions from the Quebec government to continue operating the Arvida smelter, whose antiquated potlines date from the 1950s. The smelter emits a host of toxic substances that in some cases exceed 25 times those of a modern facility. It generates the highest levels of sulphur dioxide and particulate matter of any aluminum smelter in Canada. It also generates more than 500,000 tonnes of CO2 annually.

Rio Tinto says it has invested tens of millions of dollars to improve the smelter’s environmental performance, reducing particulate matter emissions by 8 per cent. Still, the Arvida smelter challenges Rio Tinto’s claims as a producer of “green aluminum” as it seeks to capitalize on the transition to electric vehicles and expand the global market for the light-weight metal.

While Arvida produces aluminum using emissions-free hydroelectricity that Rio Tinto produces itself (with additional power purchased from Hydro-Québec), it still relies heavily on coking coal in the smelting process. Arvida’s nearly 70-year-old potlines are anything but green.

Rio Tinto executives have told union officials the company could seek another extension for Arvida that could see a portion of the smelter’s older potlines continue to operate beyond 2025 until newer ones are built at an adjacent facility that opened in 2013. That site produces about 60,000 tonnes of aluminum annually using the AP60 technology, which was originally developed by French aluminum giant Pechiney. Alcan bought Pechiney in 2004.

Arvida’s older potlines produce 170,000 tonnes of aluminum a year. Rio Tinto executives have discussed adding a similar amount in new production at the adjacent AP60 smelter. But that would still fall far short of the 400,000-tonne smelter that Alcan had promised in 2006.

Whatever it decides, Rio Tinto has ruled out equipping a new Arvida smelter with the leading-edge Elysis technique it is developing in partnership with U.S. rival Alcoa Corp., with the help of the federal and Quebec governments. Elysis aims to eliminate all direct greenhouse-gas emissions in aluminum smelting, but it could be years before the technology is employed commercially. An Elysis demonstration project is planned for Rio Tinto’s Alma, Que., facility, which is the biggest and most modern of the company’s wholly owned Canadian smelters.

“We believe that the AP60 conventional technology, which generates seven times’ less greenhouse gas emissions than the industry average, is a logical pathway to assist with [Arvida’s] transition,” Mr. Vella said. “AP60 technology offers the lowest carbon smelting in the world, and this will be part of our aluminium smelting portfolio for the foreseeable future.”

The more than 600 employees who work at the Arivda smelter just wish the company would make up its mind. Replacing the old potlines with new ones would take years and cost hundreds of millions of dollars. A smelter using AP60 technology would likely employ fewer people. But it might keep Arvida on the map for another century.