Rio Tinto divests global operations to focus on Canada
Company will shed 6000 jobs, but expects to bring back thousands once expansions in B.C. and Que. are complete
MONTREAL—Rio Tinto’s Canadian aluminum assets will remain among the company’s jewels after it divested 13 non-core assets in other countries to boost profitability.
The mining-giant will sell 30 per cent of its overall aluminum production and 36 per cent of its alumina output as it focuses on its best assets.
The divestitures mean the company will slip to about the world’s fourth-largest aluminum producer from its current No. 2 spot, but will remain No. 1 in bauxite while dropping to No. 2 in alumina.
Led by its operations in Canada, all remaining operations will be powered by hydro electricity, nuclear power and a small proportion of natural gas.
Most of Rio’s aluminum businesses were acquired when it bought Montreal-based Alcan in 2007 for US$38.1 billion near the height of a commodities boom, just months before the global economic crisis of 2008.
Rio Tinto Alcan will continue to manage seven of the 13 assets: three specialty alumina plants and the Gardanne refinery in Europe, the Lynemouth smelter and a power station in the U.K. and the Sebree smelter in the U.S.
Six other assets in Australia and New Zealand will be transferred into a new business unit, to be called Pacific Aluminium, which will report separately from the Rio Tinto Alcan product group before they are sold.
The company says it hasn’t considered selling any of its Canadian operations in B.C. and Quebec, many of which are targeted for modernization.
In September, the company announced that more than $1.8 billion will be spent this year to develop two low-cost aluminum smelters in Quebec and B.C. and a further $1.8 million on other projects.
But it also plans to close its Shawinigan smelter by 2015 and modernize the Arvida works in Saguenay, Que.
A company spokeswoman says the timing of these decisions will be affected more by macro-economic conditions than by any impact from the asset divestment, which has been in the works for more than six months.
The divestments will shed about 6,000 jobs, but a string of expansions will eventually add back a few thousand positions.