Eyes on smelter as Rio makes $1.5b pledge to cut emissions
CLEANER energy would need to be sourced to power the energy-intensive Boyne Smelters for Rio Tinto to reach its new emissions reduction targets.
Last week the mining giant announced a $1.5 billion spend in the next five years on initiatives to become a net zero emitter by 2050 and to reduce direct emissions by 15 per cent within 10 years.
Boyne Smelter is part of Rio's Pacific Aluminium that holds the company's highest emitting refineries and smelters globally.
Pacific Aluminium assets emitted 10.3 million tonnes of carbon dioxide in 2018.
Boyne and the Tomago NSW smelters are powered by coal-fired power stations - with Boyne locked in to a long-term contract to receive 850MW at a discounted rate from Gladstone Power Station until 2030.
"Repowering our aluminium assets and increasing the share of renewable electricity more broadly will be central to our decarbonisation strategy to 2030," Rio's 2019 climate change report said.
While discussing details of its plan, Rio Tinto chief executive Jean-Sebastien Jacques acknowledged the company "has a challenge" in its Pacific Aluminium business.
Mr Jacques described climate change as a "global challenge" that required action across nations, industries and society.
"The ambition is clear but the pathway is not and the challenge for the world, and for the resources industry, is to continue the focus on poverty reduction and wealth creation, while delivering climate action," he said.
The Sydney Morning Herald reported that Morgans analyst Adrian Prendergast said the Pacific Aluminium assets "stick out" in Rio's portfolio as "low-economic and highly carbon-intensive".
Mr Prendergast said these assets would unsurprisingly be a significant hurdle in Rio Tinto's emissions-reduction drive. Pacific Aluminium recently recorded a full year loss of $137 million across its Queensland, NSW, Tasmanian and New Zealand operations.
Rio said the low aluminium profitability was due to challenging conditions in markets and policy uncertainty.
"We continue to actively work on enhancing the competitiveness of our smelters, including discussing energy pricing with stakeholders, to ensure the sustainability and global competitiveness of our smelters," it said.
Rio Tinto is already reviewing the future of two of its aluminium smelters - Icelandic Aluminium Company and New Zealand Aluminium - due to market challenges and high power prices.