Rio Tinto may cut output at Tasmania aluminium smelter

 

 

Workers at the Bell Bay aluminium smelter, part of the Pacific Aluminium business that Rio Tinto is looking to sell, are worried 600 jobs could be lost, however the company said no decision had been made to axe jobs or shut the smelter.

 

 

"The aluminium sector in Australia is facing tough market conditions in the form of a high exchange rate, higher costs of production and low aluminium prices," the general manager of the Bell Bay Aluminium smelter, Ray Mostogl, said.

 

 

Some potlines could be closed while conditions remain tough, but the company declined to confirm a report in the Australian Financial Review that workers had been told shutting the plant in two years was an option.

 

 

"We are leaving no stone unturned as we try to make Bell Bay resilient in any market conditions," Mostogl said.

 

 

Aluminium producers worldwide have been slashing output to help support the market.

 

 

In Australia, Norsk Hydro has cut a third of the output at its 180,000 tonnes-a-year Kurri Kurri aluminium plant and has warned it may have to cut more, while Alcoa is reviewing the future of its 190,000 tonnes-a-year Point Henry aluminium smelter.

 

 

Rio Tinto is negotiating a new power supply contract with Hydro Tasmania for Bell Bay from May 1 that would be key to helping cut costs at the plant, which produced 181,000 tonnes of aluminium last year.

 

 

The plant has been the focus of a loud campaign over the past year by the Australian Workers Union, which claims Bell Bay workers are paid less than workers at other aluminium smelters in Australia. The company has said the smelter pays competitive rates.

 

 

Alarm at Bell Bay rose over the past week after BHP Billiton announced it was suspending production and conducting a review at its TEMCO manganese alloy smelter, near the Bell Bay plant, as the strong currency and rising operating costs have made the business uncompetitive.