By Robb M. Stewart
MELBOURNE, Australia--Rio Tinto PLC (RIO), one the largest
private employers in Australia's far north, will halt production of
alumina at an unprofitable refinery that has struggled with low
prices and a high exchange rate.
The Anglo-Australian mining company said Friday it expects to
begin the process of suspending refining operations at Gove near
the town of Nhulunbuy in the first quarter of 2014 and focus in
future on mining bauxite at the site, which employs 350 staff and
contractors.
"Our aluminum business is facing challenging market conditions
and tough decisions are needed, but those decisions are so much
harder when our employees and local communities are affected as
they are in Nhulunbuy," Sam Walsh, chief executive of the
London-based company, said in a statement released to the
Australian Securities Exchange.
Rio Tinto's Gove refinery and bauxite mine in the remote
Northern Territory together employ roughly 1,400 people, including
contract workers. The mining town of Nhulunbuy, which lies on the
edge of the Arafura Sea, has about 3,800 permanent residents.
The refinery has suffered heavy losses for some time and Rio
Tinto had previously threatened to close the operations, but agreed
in February to keep it open after securing a 10-year supply of
natural gas that will substitute for costly fuel oil. That supply
deal fell through in July with a change in government in the
Northern Territory. Rio Tinto early this week confirmed it had
scrapped plans to convert the refinery to run on gas.
Mr. Walsh said the company had worked with federal and territory
governments over recent months to secure a future for the refinery
and a number of scenarios were considered, but it wasn't possible
to find a sustainable solution. He said the Northern Territory
government had done all it could to help secure a future for the
operation.
The company said it would consult with workers and the local
community over the coming weeks to develop plans for the timing of
the closure of the refinery, and at this stage there would be no
immediate change in operations.
Bauxite is the mineral form of aluminum. Alumina is the given
name for aluminum oxide, which is extracted from bauxite.
Write to Robb M. Stewart at robb.stewart@wsj.com
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