Anglo-Australian mining giant Rio Tinto Group last week filed a formal complaint with the Icelandic government on claims that the firm’s power supplier to the Rio Tinto Iceland Ltd (ISAL) aluminium smelter engaged in anti-competitive behavior.
The firm submitted its complaint to the Icelandic Competition Authority (ICA) on Wednesday, saying energy provider Landsvirkjun conducted discriminatory pricing practices and utilized long-term contracts to make it impossible to shop elsewhere for power for the Hafnarfjörður plant.
Although Rio Tinto says it has undertaken “numerous efforts” to come to an agreement over pricing that would ensure the future operation of its aluminium smelter, it says Landsvirkjun has not shown any preparedness to meet Rio Tinto at a cost necessary to save the plant and the jobs of its 500-strong workforce.
Rio Tinto Aluminium chief executive Alf Barrios elaborated upon the firm’s complaints against ISAL’s former power provider.
“Landsvirkjun’s abuse of its dominant position in the Icelandic energy market needs to be addressed or Iceland is in danger of losing export industries with major employment like ISAL. ISAL pays significantly more for its energy than other aluminium producers in Iceland, which undermines its competitive position in the market. We cannot continue to produce aluminium in Iceland if the power pricing system is not transparent, fair and internationally competitive. In the meantime, our teams at ISAL will continue to focus on safely reducing cost, improving productivity and delivering on our commitments to customers.”
Rio Tinto began a review of its Icelandic operations earlier this year, which is currently ending its first phase with Wednesday’s filing. The firm said the failure for Landsvirkjun to meet them on price would prompt it to begin considering shutdown of the plant.
ISAL aluminium smelter has a nameplate capacity of 210 thousand metric tons per annum of liquid metal and 230 thousand metric tons per annum of extrusion ingot, accounting for about 6 percent of Rio Tinto’s annual aluminium output.