MONTREAL—Rio Tinto Alcan plans to expand its smelting capacity in Canada once the fragile aluminum market gains strength, the mining giant’s CEO said Feb. 18.
Alfredo Barrios says aluminum prices, which have retreated since rising last year, are not encouraging investment at the moment because of excess smelting capacity.
But strong long-term fundamentals, including demand expected to grow through 2025 in part from the automotive sector, should eventually encourage new investments.
“If the market starts improving and the returns start remunerating the investments then there are a number of projects that we have across the world, even in Quebec, to potentially grow,” Barrios, who took the helm last June, told reporters.
He pointed specifically to a new Alouette smelter and expansion of its AP60 pilot project in Quebec.
“When the moment is right, Quebec is a clear place where we will be investing in smelting. That is where our core smelting business is.”
However, the 48-year-old former oil executive wouldn’t say how long it could take before these new projects could be built.
Barrios said Rio Tinto Alcan has been the only aluminum company outside of China and the Middle East to have invested heavily in recent years despite weak market conditions and low prices.
It spent more than US$7.5 billion in Canada over the past five years, including US$4.8 billion to modernize a smelter in Kitimat, B.C., that is set to open in the coming months.
Aluminum was Rio Tinto’s most improved sector last year, with underlying earnings increasing 124 percent to US$1.25 billion. However, iron ore remained by far the most important division, accounting for 87 percent of Rio’s profits.
Rio Tinto employs 13,000 people in Canada, while the aluminum division has about 18,000 in 27 countries, down from 21,000 three years ago.