Rio Tinto has announced to conduct a strategic review of the Isal aluminium smelter in Iceland. The review will consider all options including curtailment and closure, and will be complete in the first half of 2020.
Isal is expected to remain unprofitable in the short to medium term in the challenging conditions facing the aluminium industry, due to the smelter’s uncompetitive energy costs and historically low aluminium prices.
Rio Tinto will continue discussions with the Government of Iceland and power provider Landsvirkjun on how the smelter can return to profitability and become competitive in the global market. Alf Barrios, CEO of Rio Tinto Aluminium, said: “We have worked intensively to improve Isal’s performance; however, it is currently unprofitable and cannot compete in the challenging market conditions due to its high power costs.” The company will review options for the smelter, with the aim of finding a solution for Isal to become an economically viable business.
Production at Isal has already been reduced to 85% of the smelter’s capacity due to its lack of profitability. Isal is wholly owned by Rio Tinto and around 500 people work at the site.