Rio Tinto Clears Major Hurdle For US$2B Kitimat Smelter Modernization In British Columbia

London, UK - Rio Tinto's US$2B project to modernize its Kitimat smelter in British Columbia, Canada, will be submitted for Board approval following the decision by the British Columbia Utilities Commission (BCUC) to accept the 2007 Energy Purchase Agreement (2007 EPA) between Rio Tinto Alcan and BC Hydro.

This is the last of three conditions necessary to be met for the project to go ahead. The other two key conditions were the resolution of a long-term labor agreement to ensure stability during the planning, the construction and the start-up of the Modernization Project (achieved May 2007), and assurances on environmental permitting issues (achieved late December 2007)

Jacynthe Cote, Rio Tinto Alcan Primary Metal President, said: "We are very pleased with today's BCUC decision to accept the new power agreement between Rio Tinto Alcan and BC Hydro. Final approval of the project will allow us to stay on target to deliver first metal by 2012 and reduce greenhouse gas emissions by half a million tons per year."

The new power agreement provides that the Kitimat smelter's electricity needs have priority over any other power sales. This will allow Rio Tinto Alcan to adjust its power sales to BC Hydro depending on the final configuration and power requirements of the modernized smelter.

Once approved, the modernisation of Rio Tinto Alcan's Kitimat smelter would increase Rio Tinto's annual global primary aluminium production capacity by more than three percent. This will make Kitimat not only one of Rio Tinto's largest wholly-owned smelters, but also one of the three largest in North America. Kitimat's aluminium production capacity would increase by 125,000 tons using clean and renewable hydroelectric power from the Rio Tinto Alcan-owned Kemano power station.

SOURCE: Rio Tinto