Rio Tinto will launch a strategic review of the ISAL smelter in Iceland in an effort to improve its competitive position.
ISAL has been operating at loss due to its uncompetitive energy costs and historically low aluminium prices, and Rio Tinto expects it to remain unprofitable over the short to medium term.
The smelter, which is wholly owned by Rio Tinto and employs around 500 people, has already trimmed production to 85% due to its lack of profitability.
Rio Tinto Aluminium chief executive Alf Barrios said the company would continue discussions with the Government of Iceland and power provider Landsvirkjun on how the smelter can return to profitability, but did not exclude the possibility of curtailment and closure.
“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,” he said.
“Rio Tinto will review options for the smelter, with the aim of finding a solution for ISAL to become an economically viable business.
“ISAL makes a significant contribution to Iceland’s economy and we will work closely with stakeholders who have a shared interest in a strong future for the smelter, including the government, Landsvirkjun, employees, unions and the local community.”
The strategic review will be complete in the first half of 2020.