Rio Tinto’s Icelandic ISAL smelter is under review after the company determined it will remain unprofitable in the short- to medium-term.
The company acknowledged in a statement that it is exploring options to improve the smelter’s viability and competitiveness in a global aluminum market that has fallen on hard times. In particular, ISAL’s high energy costs are at odds with historically low aluminum prices.
Rio Tinto is engaged in discussions with both Iceland’s government and power provider Landsvirkjun about how to reverse the smelter’s fortunes so that it can compete on a global scale. Alf Barrios, Rio Tinto chief executive officer, noted the company has worked to improve the smelter’s performance, but that its high power costs are, at present, making it a liability.
Nevertheless, the company appears to be searching for a way to return ISAL to profitability, albeit under trying conditions.
The smelter, wholly owned by Rio Tinto, employs 500 people.