Rio Tinto cuts emissions, boosts production at Kitimat

VANCOUVER — Mining giant Rio Tinto (NYSE: RIO; LSE: RIO) has produced the first aluminum cast from its 60-year-old Kitimat smelter in B.C. since its extensive, US$4.8-billion upgrade.

In a press release, Rio Tinto’s aluminum CEO, Alfredo Barrios, said the upgrade “transformed its performance,” and moved it from the fourth quartile to the first decile of the industry cost curve.

The modernization project, which rolled US$1.5 billion over budget last year, will double production capacity to 420,000 tonnes per year.

Across its global operations, the mining titan produced 3.4 million tonnes of aluminum in 2014, down slightly from 3.5 million tonnes produced the year before. In contrast, underlying earnings for the metal more than doubled to US$1.3 billion in 2014 from US$557 million.

Rio Tinto atrributes the gains to higher prices for aluminum, and reported increased efficiency and productivity of operations.

As an example, the new Kitimat smelter requires 36% less power from its wholly owned hydro electric plant, and will cut emissions of hydrocarbons, gaseous fluorides and greenhouse gases by an average 49%. 

Despite the smelter’s much-needed “green” upgrade, the facility still raises air-quality concerns for local activists in nearby Kitimat — a community originally carved out of the wilderness and built to accommodate the operation’s workforce.

They’re concerned the 56% increase in sulphur dioxide emissions from 26 to 42 tonnes per day — because of increased production — will bring health issues for residents. But the company says an independent study has shown the impact would have “limited effects on human health and the surrounding environment.” 

The town of 10,000 people is in the midst of an industrial boom, propped up by a number of proposed liquefied natural gas (LNG) pipelines and Royal Dutch Shell’s $25 billion to $40 billion LNG export facility project, which received conditional approvals from the B.C. government last month. 

According to a statement from the Kitimat Economic Development Association, the community is “ready for another mega project,” and the start-up of Rio Tinto’s smelter “sets the stage for local businesses to take advantage of the opportunities coming to the area.”