Rio calls force majeure over alumina third party contracts

News Analysis




Rio calls force majeure over alumina third party contracts

Gas shortages in Australia reduce production from the Gladstone refineries.

An incident back in early March on the Queensland gas pipeline has severely affected supply to Rio Tinto’s alumina refineries in Yarwun, Gladstone and Queensland Alumina (QAL). The pipeline operator is currently estimating that a return to full capacity will be in the second half of the year, significantly longer than first expected. As a consequence, Rio Tinto has had to declare force majeure on third-party alumina contracts as both refineries will be operating at a lower capacity for longer than expected and cannot meet its supply commitments.

However, in-house aluminium smelter production is not expected to be affected by any shortfalls. Yarwun has a capacity of 3Mtpy alumina and hydrate after the company doubled production in 2012. The company is currently partnering with the Australian Renewable Energy Agency and Sumitomo researching clean hydrogen as an alternative fuel source to replace natural gas in the calcination process for alumina. This would include a hydrogen pilot plant.

Queensland Alumina is also affected, which is an independently managed joint venture between Rio Tinto (80%) and Rusal (20%). The operation has a capacity of 3.7Mtpy and is also located in Gladstone.