Rio Tinto Alcan curtails production and cuts costs in response to global economic conditions



    MONTREAL, Jan. 20 /CNW Telbec/ -

    
    Key measures

    - A further six per cent reduction in aluminium production, bringing the
      total reduction to approximately 11 per cent, and close to six per cent
      reduction in alumina production
    - Reduction in global workforce by approximately 1100 roles
      (300 contractors and 800 employee roles)
    - Substantial cost reduction programmes in Rio Tinto Alcan facilities
      worldwide
    - Permanent closure of Beauharnois smelter in Quebec, Canada
    - Production at Vaudreuil alumina refinery in Canada to be temporarily
      curtailed by 400,000 tonnes
    - Expected sale of interest in Alcan Ningxia joint venture in China
    - As previously announced, the anticipated ending of smelting operations
      at Anglesey Aluminium joint venture in the United Kingdom in
      September 2009 when the current power contract expires. The impact on
      production and headcount is included in these figures.
    

    Rio Tinto Alcan plans to implement further production curtailments to
align production with customer demand. Further to curtailments which occurred
in the fourth quarter of 2008, totalling five per cent of global production,
Rio Tinto Alcan plans to reduce aluminium output by another 230,000 tonnes.
This brings the total production decrease to 450,000 tonnes or approximately
11 per cent of its total annualised aluminium capacity.
    There will also be a cost saving programme across all Rio Tinto Alcan
regions. This is part of the global cost reduction programme announced by Rio
Tinto in December 2008 as part of a series of Group wide initiatives aimed at
reducing debt, conserving cash and preserving shareholder value.
    "Our goal is to align production with customer demand and reduce our
operating costs as much as possible. Increasing efficiency throughout our
operations and streamlining our organisation will be crucial to achieving our
objectives and preserving value for shareholders," said Dick Evans, chief
executive, Rio Tinto Alcan. "We are taking steps towards optimising our world
class portfolio of low cost, long life assets, the majority of which are in
the lowest half of the industry cost curve."
    As recently announced, Jacynthe Côté, who on 1 February 2009 will become
chief executive of Rio Tinto Alcan, is in the process of carrying out a full
review of Rio Tinto Alcan's organisational structure and operating strategy in
light of the current economic context. The review will be complete in early
February.
    Rio Tinto Alcan is taking steps to optimise its portfolio of assets to
maximise cash preservation and strengthen the overall position of the
business. Rio Tinto Alcan is also reviewing expenditures and reorganising
operations at higher cost facilities.
    Plans are in place to reduce the workforce by approximately 1100 roles
(300 contractors and 800 employee roles). In addition, substantial cost
reduction programmes are being implemented across all Rio Tinto Alcan
facilities.
    "We realise that the measures we're announcing today will have serious
impacts on our employees and local communities. The global economic downturn
has meant that we must make difficult but necessary choices for our
organisation, and we will make sure that those affected are treated with
fairness and respect," said Jacynthe Côté, president and chief executive
officer, Primary Metal, Rio Tinto Alcan. "We will continue to honour our
commitments to employees, customers, governments, communities, and other key
stakeholders."
    Rio Tinto Alcan will continue discussions with all relevant stakeholders
to assist affected employees through various support programs and in full
compliance with the relevant Individual and Collective Labour Agreements.

    Beauharnois smelter closure

    The Beauharnois smelter in Quebec, Canada, which was commissioned in 1943
and employs 220 people, will cease smelting operations by the end of the
second quarter 2009. The shutdown of its 52,000 tonnes of annual production
will be completed safely in a controlled and gradual manner. The smelter uses
Söderberg technology, which is to be phased out of all Quebec aluminium
smelters by 2015 in accordance with environmental regulations.
    Rio Tinto Alcan's regional industrial development team will continue
working with local stakeholders to support sustainable future industrial
development and investigate business options for the facility, which could
include continued casting activities.

    Aluminium production curtailments

    In 2008, Rio Tinto Alcan began a series of production curtailments at the
Dunkerque (France), Lochaber (United Kingdom), Lynemouth (United Kingdom), and
Saint-Jean-de-Maurienne (France) smelters and at its SORAL (Norway) joint
venture. Further production curtailments will be progressively implemented at
Saint-Jean-de-Maurienne.
    Gradual aluminium production curtailments will also be implemented at
selected smelters in the Rio Tinto Alcan network by temporarily not relining
pots that come to the end of their useful life.

    Bauxite and Alumina production curtailments

    The Vaudreuil refinery in Canada will curtail its production of alumina
by 25 per cent or approximately 400,000 tonnes. Similarly, as a result of
current European market conditions for non-metallurgical grade alumina, Rio
Tinto Alcan will curtail production at the Gardanne refinery in France by 15
per cent or approximately 105,000 tonnes. These production curtailments will
result in a six per cent reduction of global annual capacity.

    Other measures affecting production capacity

    Also included in the total 11 per cent reduction in aluminium production
capacity are the following:

    
    - Reduced capacity at Tiwai Point (New Zealand) due to equipment failure
    - Reduced production due to energy supply issues at Alucam (Cameroon)
    - The expected sale of Rio Tinto Alcan's 50 per cent interest in an
      aluminium smelter in the Ningxia province of China
    - As recently announced, due to unsuccessful power negotiations, the
      anticipated ending of smelting operations at Anglesey Aluminium Metal
      at the end of September 2009 when its current power contract expires.
    

    Furthermore, the Centre de produits cathodiques in Jonquière, Quebec,
Canada will reduce its carbon operations by 50 per cent and one of the seven
anode baking furnaces at Aluchemie in the Netherlands will be shut down.

    Context

    In December 2008, Rio Tinto announced a detailed set of measures in
response to the unprecedented rapidity and severity of the global economic
downturn, which has caused sharp falls in commodity prices and a significantly
weaker demand outlook. These initiatives are aimed at preserving value for
shareholders by conserving cashflow and reducing levels of debt.

    About Rio Tinto

    Rio Tinto is a leading international mining group headquartered in the
UK, combining Rio Tinto plc, a London and NYSE listed company, and Rio Tinto
Limited, which is listed on the Australian Securities Exchange.
    Rio Tinto's business is finding, mining, and processing mineral
resources. Major products are aluminium, copper, diamonds, energy (coal and
uranium), gold, industrial minerals (borax, titanium dioxide, salt, talc) and
iron ore. Activities span the world but are strongly represented in Australia
and North America with significant businesses in South America, Asia, Europe
and southern Africa.




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