Anglo-Australian mining giant Rio Tinto Plc/Ltd. (RIO, RIO.AX,RIO.L) approved Thursday an additional $2.7 billion capital investment to modernize its Kitimat aluminum smelter in British Columbia in order to complete the $3.3 billion project in 2014. The company currently anticipates the first metal to come on stream in the first half of 2014, with an expected ramp up of nine months.
The multi-billion investment is one of the largest private investments in British Columbia's history, and it will ensure the sustainability of the aluminum business in Kitimat for next few decades. The modernization project will also deliver about 1,000 stable, specialized jobs in the province for the long term, along with 2,500 jobs during the peak period of the construction phase.
"The modernization of Kitimat will transform its performance, moving it from the third quartile to the first decile of the industry cost curve, and cut greenhouse gas emissions by about half. This project draws on two of our greatest competitive advantages - clean, self-generated hydropower and leading-edge AP smelting technology," Rio Tinto Alcan Chief Executive Jacynthe Côté said in a statement.
Rio Tinto, the world's second largest producer of iron ore, said the modernization project which began in 2008 will see Rio Tinto boost the smelter's current production capacity by more than 48 percent to about 420,000 tonnes per year. Following the modernization, Kitimat will not only be one of Rio Tinto's largest wholly-owned smelters, but also one of the three largest in North America.
The previous investments towards the project was a $200 million capital investment made in July 2008 and $300 million in October 2008.
The project would upgrade the existing 54-year old smelter using Rio Tinto Alcan's proprietary state-of-the-art AP technology using hydroelectric power from Rio Tinto Alcan's Kemano power station, boosting its aluminum production capacity.
The technology is the most cost effective, energy efficient, and environmentally friendly smelting technology available, allowing the modernized plant to reduce greenhouse gas emissions by about 50 percent annually.
"Once completed, Kitimat will be one of the most efficient and lowest-cost smelters in the world, and will better position us to serve the rapidly growing demand for aluminium in the Asia-Pacific market," Côté added.
RIO closed Thursday's regular trading session at $52.16, down $0.91 or 1.71 percent on a volume of 3.65 million shares.
In Friday's regular trading session, RIO.AX is currently trading on the Australian Securities Exchange at A$65.89, down A$0.03 or 0.05% on a volume of 1.54 million shares.
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