Rio Tinto refinery takes $800m hit
THE value of Rio Tinto Yarwun took an $800 million hit last year, owner Rio Tinto has confirmed, off the back of the ramp-up of a bauxite mine in North Queensland.
In its annual report, released last week, Rio Tinto revealed its net profit fell 41 per cent amid impairment charges for the Yarwun refinery and a copper project at Magnolia.
Previously the value of Yarwun was considered in aggregate with Queensland Alumina and the Weipa bauxite mine.
But following the ramp-up of the Amrum expansion at Weipa, bauxite exports from the North Queensland facility increased to a level that meant it would be considered to generate cash flows independent of Gladstone's two alumina operations.
Also considered as part of the writedowns were forecast commodity prices.
"This change in circumstance has resulted in the previous CGU being split in 2019 into three CGUs: Weipa bauxite mine, Yarwun alumina refinery and Queensland Alumina," the report said.
Also, Alumina prices declined last year on the back of increased supply, weaker demand and lower caustic soda prices. The report said that at 7.7 million tonnes, alumina production was 3 per cent lower than in 2018, partly due to a maintenance shutdown at Yarwun.
Production at Yarwun and Queensland Alumina were down last year compared to 2018 and 2017. The report also reiterated the challenges faced by the aluminium industry, and highlighted challenging conditions in global markets and policy uncertainty as reasons for low profitability.
"We continue to actively work on enhancing the competitiveness of our smelters, including discussing energy prices with stakeholders, to ensure the sustainability and global competitiveness of our smelters in Australasia and Iceland," the report said.