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Rio Tinto Alcan is in talks with workers about reopening a nine-year collective agreement at its aging Arvida smelter in Quebec, as the company battles stubbornly low aluminum prices hit by a global commodities slowdown.
Montreal-based Rio Tinto Alcan, the aluminum division of parent Rio Tinto PLC, said it met on Thursday with representatives of the 1,500-strong Canadian Auto Workers union at Arvida and related facilities, for preliminary talks about how to cut costs at the smelter.
The meeting, expected to be the first of several over coming weeks, came just days after London-based Rio Tinto, the world’s third-biggest diversified miner, said it would delay new project approvals in the near term because the business outlook has become less certain than it was even a few months ago.
“There are a number of headwinds that we are dealing with, but certainly with the metal where it is, today it is just under $2,000 on the [London Metal Exchange], it’s a pretty challenging environment,” said company spokesman Bryan Tucker.
Prices for aluminum, the world’s most produced metal, are close to two-year lows, forcing companies to cut forecasts and review the viability of projects, large and small.
Alcoa Inc., the largest U.S. aluminum producer, said Tuesday it has cut its forecast for global consumption to reflect concerns about lower demand from China, the world’s most voracious consumer of commodities for the past decade.
Aluminum prices closed at $2,016 (U.S.) a tonne on the London Metal Exchange (LME) on Friday, compared with $2,353 in March and $2,797 a year before that.
Rio Tinto Alcan is planning to shut the Avida smelter in 2015 because it will no longer meet Quebec’s environmental standards. That is the same year its agreement with the union expires.
“We’re still exploring what the possibilities are. That is why we are saying that one of the serious possibilities that we are looking at might be the reopening of the [collective] agreement, but we have to reduce our costs and we have to find ways to do that,” Claudine Gagnon, a Rio Tinto Alcan spokeswoman in Montreal, said Friday.
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