Rio Tinto Books A$1.2 Billion In Losses Due To Carbon Reduction Efforts

Rio Tinto Books A$1.2 Billion In Losses Due To Carbon Reduction Efforts

Anglo-Australian mining giant Rio Tinto Group was forced to write off A$1.2 billion in losses and devaluation to its aluminium refineries in Australia due to the cost of its carbon emission reduction efforts at the sites.

Rio Tinto CEO Jakob Stausholm said in an interview earlier this week that Australia currently does not produce even close to enough renewable energy to power the energy-intensive production of primary aluminium.

“Ultimately, if we can’t get renewable energy in Australia it’s impossible to produce something and export it out of Australia.”

He went on to say that he is “determined to do everything he could” to find a solution.

Staushold told another Australian news outlet that long-term solutions that supplied aluminium smelters with reliable power are the only way to “future-proof” the aluminium industry. Such a solution would be complicated though, he noted, as the industry requires large amounts of energy to operate.

Meanwhile, Rio Tinto’s CFO Peter Cunningham explained that the Yarwun operations and the joint venture at Queensland Alumina are suffering substantial financial losses thanks to the increases in carbon reduction.

“It is a segment that’s been under pressure. Those assets have been, I think, challenged on performance over the last few years.”

Rio Tinto enjoys special allowances from the government as it is compelled to drop its carbon footprint by almost 5 percent through the end of the decade. However, Cunningham says it continues to need to invest significant sums on clean energy development.

“There’s a fair bit of capital needed in those businesses over the next few years as well. But I think the core final thing I’d say is they remain integral to our system. Because these do give security of supply to our system.”

Despite a significant drop in earnings over the first half of 2023, Stausholm still wished to express his gratitude for the government’s help.

“We are working so hard to work with the government to future-proof these assets for decades to come because there is no doubt that change is necessary. We cannot continue with a level of carbon dioxide emissions from those assets, we need to find a decarbonisation pathway forward that keeps those assets competitive.”

As to power needs, Stausholm notes that the amount of it generated via solar is not remotely sufficient for the needs of the aluminium sector.

“The kind of solar requirements we have is like 12 times bigger than the biggest solar farm that exists in Australia, so this is something of an enormous scale to make it happen […] it will take a while.”

Ultimately, Rio Tinto hopes that hydrogen will be the low-carbon way forward. The firm recently announced a partnership with Sumitomo Corporation for a A$111 million hydrogen plant, which will be the first one in history.