Capital Gain

Rio strikes power deal

Published: in FINANCE by .

Rio Tinto Group said it reached agreement on a new power deal that will allow it to continue operating the ISAL aluminum smelter in Iceland.

The world’s second-biggest miner threatened to close down the operation outside Reykjavik last year unless power supplier Landsvirkjun changed the terms of an energy agreement. Producers of the metal outside of China have been struggling to generate profits as an oversupply weakens prices.

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“We are pleased to have reached an agreement on a power price that, coupled with improved efficiencies we have delivered at the site, makes ISAL more competitive,” Rio said in a statement Monday.

The move follows a similar deal Rio struck earlier this year in New Zealand to keep its aluminum plant open there after previously saying it would shut the facility.

Rio started a strategic review of the ISAL smelter a year ago to explore options such as curtailment or a shutdown, saying the smelter was unprofitable. That review followed the collapse of a previous plan to sell the operation.

© 2021 Bloomberg

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