Rio Tinto is considering suspending production at its Straumsvík smelter in Iceland for two years, Morgunblaðið reports. The company, which is one of the world’s largest metal and mining corporations, is considering various options to reduce its losses during the economic downturn due to the coronavirus pandemic. Rio Tinto executives have also complained that high power costs have contributed to the company’s losses and are preparing a lawsuit against Iceland’s National Power Company.
Rio Tinto’s ISAL aluminium smelter, located in Southwest Iceland, has been operating at a loss for eight years. Its losses in 2019 alone amounted to ISK 13 billion ($91 million/83.7 million). Rio Tinto Aluminium chief executive Alf Barrios stated earlier this year that the smelter’s performance “is currently unprofitable and cannot compete in the challenging market conditions due to its high power costs.”
Prepare to sue Iceland’s National Power Company
Morgunblaðið’s sources report that the metal corporation is preparing a lawsuit against Iceland’s National Power Company, which is intended to release Rio Tinto from a large part of the electricity purchase obligation to which it is subject. The lawsuit also addresses alleged “product fraud” on the part of the National Power Company, which Rio Tinto alleges has been selling the smelter energy produced by coal and nuclear power, while the company purchased the energy on the grounds that it was produced using hydropower.
