The head of Rio Tinto's global aluminum business says it will complete the modernization of its Kitimat smelter in British Columbia but won't add significant new growth projects “for the foreseeable future.”
Rio Tinto Alcan CEO Jacynthe Cote told an investor seminar in Australia that the revamped Kitimat smelter will reduce the cost of producing aluminum.
She said Rio Tinto (NYSE:RIO
, Stock Forum
) expects to complete the B.C. project by the end of 2014 but needs to continue cutting costs because of tough industry conditions caused by low aluminum selling prices.
The aluminum group has reduced more than US$450 million of costs this year by curtailing production and cutting jobs. It accounts for one quarter of the US$1.8 billion of operating costs trimmed by Rio Tinto.
Since 2009, Rio Tinto Alcan has closed or curtailed more than 600,000 tonnes of aluminum capacity, including 100,000 tonnes from this fall's closure of its smelter in Shawinigan, Que. It has also generated more than US$4.4 billion from selling 13 non-core businesses since Alcan was purchased by Rio Tinto for US$38.1 billion four years ago.
Rio Tinto chief executive Sam Walsh said the Anglo-Australian mining company will dramatically cut capital spending over the next two years to reduce costs and pare its US$22-billion debt.
The company plans to spend US$8 billion on capital projects in 2015, less than half the nearly US$17 billion spent in 2012.
Walsh said his goal is to transform the iron ore, copper, aluminum and diamond producer into the highest mining performer.