PERTH (miningweekly.com) – Mining major Rio Tinto has submitted a formal complaint to the Icelandic Competition Authority (ICA) alleging abuse of market dominance by local energy supplier Landsvirkjun, to Rio’s ISAL aluminium smelter in Iceland.

Rio is asking the ICA to address anti-competitive conduct by Landsvirkjun through discriminatory pricing and long-duration power contracts, so that the ISAL smelter and other Icelandic manufacturing and businesses are able to compete internationally.

Rio’s complaint alleges that pricing terms of the power agreement with Landsvirkjun are discriminatory, abuse its market dominant position and cannot be justified. Landsvirkjun’s supply contracts bind customers to long-duration terms, rendering it impossible for alternative energy suppliers to either enter the Icelandic market or expand operations.

“Landsvirkjun’s abuse of its dominant position in the Icelandic energy market needs to be addressed or Iceland is in danger of losing export industries with major employment like ISAL. ISAL pays significantly more for its energy than other aluminium producers in Iceland, which undermines its competitive position in the market. We cannot continue to produce aluminium in Iceland if the power pricing system is not transparent, fair and internationally competitive,” said Rio Tinto Aluminium CEO Alf Barrios.

Barrios’ warning comes shortly after Rio announced that it would wind down operations and eventually close its aluminium smelters in New Zealand after failing to secure power price reductions to make the operation financially viable. Some 1 000 direct and 1 600 indirect employees will be affected by the closures in New Zealand.

Barrios said that while its complaint to the ICA is under review, the company would continue to focus on safely reducing cost, improving productivity and delivering on commitments to customers at ISAL.

The filing of the complaint concludes the first part of a strategic review of the ISAL smelter, which was announced in February this year.

The miner warned that if Landsvirkjun did not address its abusive conduct, ISAL would have no choice but to consider termination of its energy contract and commence planning for orderly closure of the smelter, which currently employs some 500 staff.