19 July, 2017
Courtesy of the Australian
High east coast power prices have cost Rio Tinto tens of millions of dollars in forgone revenue, with the mining giant significantly cutting back on output at its Boyne Island aluminium smelter in Queensland.
Yesterday’s quarterly production report from Rio showed that Boyne Island had produced just 73,000 tonnes of aluminium during the June quarter, well down from the 86,000 tonnes it produced during the same period last year.
Rio began scaling back production at Boyne Island earlier this year after failing to secure “a competitively priced electricity contract”. The miner at the time said it would reduce output from the project by 14 per cent and cut a “significant” number of jobs.
With aluminium trading at an average price of $US1886 a tonne so far this year, the 13,000 tonnes of production cut from Boyne Island over the first six months would have been worth about $US34 million ($43m) in revenue to Rio.
The sharp drop in output at Boyne Island was in contrast to the performance across the rest of its aluminium smelters in Australia, Canada, France, Iceland, New Zealand and Oman.
“Strong production was achieved across most smelters, offset by the production curtailment at the Boyne Island smelter … due to high power prices in Queensland in the first half of 2017,” the company said.
The mining giant is also under pressure from high energy prices at its Tomago Aluminium smelter in NSW.
Tomago this week warned in its submission to the Australian Competition & Consumer Commission’s inquiry into power prices that it would need to cut production and possibly jobs if there was not action to bring down energy prices.
“Governments must reconsider the current policy settings that are operating to reduce investment in coal production, as the maintenance of sufficient coal-fired electricity is the only practical way to maintain baseload power in the (National Electricity Market),” Tomago chief financial officer Steve McIntyre said.