Rio Tinto is planning to invest US$2.7 billion to complete the modernization of its aluminium smelter in Kitimat, B.C., while the company is cutting back on capital spending at projects around the world.
“For nearly 60 years, the smelter has been a major impetus for the economic development of northwest British Columbia,” said Jean Simon, president, primary metal, Rio Tinto Alcan.
“We are very proud to announce this US$2.7 billion investment to complete the modernization project. This is one of the largest private investments in B.C.’s history and it will ensure the sustainability of the aluminium business in Kitimat for decades to come.”
Rio Tinto announced on Dec. 1 that the US$3.3 billion Kitimat modernization project will be completed in 2014.
The project involves the demolition of several buildings on the site of the existing smelter and clearing space for a new plant.
The project began in 2011 and will create 2,500 jobs during the peak period of the construction phase.
When completed, the production capacity of the new smelter will increase by more than 48 per cent to about 420,000 tonnes per year.
The first production of metal is expected to come on stream in the first half of 2014 and ramp up over a nine month period.
“This project draws on two of our greatest competitive advantages – clean, self-generated hydropower and leading-edge AP smelting technology,” said Jacynthe Côté, chief executive of Rio Tinto Alcan.
“Once completed, Kitimat will be one of the most efficient and lowest-cost smelters in the world and will better position us to serve the rapidly growing demand for aluminium in the Asia-Pacific market.”
The modernized smelter will be powered exclusively by wholly-owned hydropower and use Rio Tinto Alcan’s proprietary AP40 smelting technology to reduce the smelter’s carbon dioxide emissions by about 50 per cent.
The completion of the modernization project is taking place at a time when the company is cutting back on capital spending around the world.
During an investor seminar in Sydney Australia on Dec. 3, Rio Tinto CEO Sam Walsh said total capital expenditure is forecast to be reduced to US$11 billion in 2014 and to around US$8 billion in 2015.
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