LONDON: Rio Tinto is finding out just how hard it is to produce low-carbon aluminium. The company booked a $1.175 billion impairment charge against its two Australian alumina refineries in its second-quarter results.
This is in part down to what Rio Tinto called “challenging market conditions” for alumina, which is refined from bauxite and then fed into a smelter for conversion into metal. But it is also down to the cost of decarbonising two of the company’s biggest greenhouse gas emitters. The short-term cost comes in the form of Australia’s new carbon tax on big industrial operators.
The long-term problem is the dependence of both Rio’s alumina refineries and aluminium smelters on a national power grid that is largely driven by coal and gas. Such is the aluminium paradox. A metal that is core to the green energy transition comes with a heavy carbon footprint, the sector accounting for around 2% of all man-made emissions every year.
CARBON PROBLEMS
Rio Tinto has conceded it is unlikely to meet its 15% target for reducing group emissions by 2025 without buying carbon credits, although it remains committed to its goal of cutting emissions in half by 2030. The company’s biggest carbon headache is its aluminium business, which last year accounted for 21.1 million metric tons of carbon emissions out of a group total of 30.3 million metric tons.
Rio’s Canadian smelter network draws power from Quebec’s hydro-electric system, meaning its Atlantic operations generated 4.8 million metric tons of carbon equivalent last year, half the amount produced by its Pacific operations, according to Rio’s 2022 sustainability report.
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