NEW YORK Rio Tinto Alcan
could exit more smelting capacity if it is unable to secure new
power contracts for its high-cost smelters, chief executive
officer Jacynthe Côté said in an on-stage
interview at the 2nd Annual Aluminum Summit in New York,
hosted by AMM.
"Were flagging to the
market: We have two plants ending power contracts in 2014, one
in Saint-Jean-de-Maurienne (France) and one in (Husnes)
Norway," Côté said. "If a (competitive)
electricity contract cannot be provided, (theres) a risk
of shutting down."
A spokesman for the company told
AMM after the event that only the
Saint-Jean-de-Maurienne smelter would be considered for closure
at this time.
comments fall in line with the aluminum producers
companywide cost-cutting initiatives: The Montreal-based
company announced in October it would divest 13 aluminum and
alumina assets in North America, Europe, New Zealand and
Australia as it looks to move down the cost curve
(AMM, Oct. 17).
Rio Tinto Alcan is close to
completing the sale of three of its alumina assets in France
and one in Germany as part of that plan, Côté told
attendees at the summit. "We hope to close a deal in the coming
months," Côté said.
The company is also hoping to
close on the sale of a power station in Lynemouth, England,
which previously supplied its 182,000-tonne-per-year smelter in
The one asset on the auction
block in the United States, the 199,000-tonne-per-year Sebree
smelter in Kentucky, is not as close to finding a new owner,
Côté said. "Were not in any rush. Well
see how the markets keep evolving," she told the audience.
As for the Australian assets
included in the divestment plan, Rio Tinto Alcan is still
considering either a sale or a spinoff. "We havent
excluded any option," Côté said.
Rio Tinto Alcan is not alone in
announcing smelting capacity curtailments. United Co. Rusal
said earlier this year it would consider idling 600,000 tonnes
of output in the second half of the year (AMM, May
15), while Alcoa Inc. has announced some 531,000 tonnes of
curtailments of its own (AMM, Jan. 6).
"Weve done our part,"
Côté said, pointing to earlier closures at
Lynemouth; Anglesey, United Kingdom; and Beauharnois, Quebec.
"For us, its a question of whether or not the assets are
in positive cash flow."
In addition to capacity issues,
another key topic heating up the discussion at the Aluminum
Summit was the long wait times at London Metal
Exchange-approved warehouses in Detroit.
Consumers in need of metal are
now waiting as long as nine months to a year for their pickup
slot, sources said, raising concerns about aluminums
According to Côté,
Rio Tinto Alcan is not a major player in that part of the
market, with the majority of Rio Tinto Alcans aluminum
sold directly to customers.
"Two-thirds of our material has
a name and address and goes straight to the customer,"
Côté said. "Were always opportunistically
looking at what our customers need more of."
A portion does go to traders,
however, so some of the companys aluminum may also make
its way to LME-listed warehouses, Côté said.
"Its not always evident .
. . where it ends. Some may go into warehouses, some may go to
the direct customer, some may go to traders. Am I sure none of
it is going to warehouses? No."