Diversified major Rio Tinto on Monday announced an amended power contract that would allow the ISAL aluminium smelter, in Iceland, to continue operating with an improved competitive position.
The agreement with power supplier Landsvirkjun would deliver a more competitive power price and energy flexibility that the company said was mutually beneficial for both parties.
“We are pleased to have reached an agreement on a power price that, coupled with improved efficiencies we have delivered at the site, makes ISAL more competitive," said Rio Tinto aluminium CEO Alf Barrios.
“This provides a stronger footing to continue operations at the smelter and gives increased security for the team at ISAL, who have been doing an outstanding job in challenging conditions. We will continue to work to strengthen ISAL’s future in order to keep supplying low carbon aluminium to customers in Europe and North America, and making a significant contribution to Iceland’s economy.”
In parallel to the new agreement, Rio Tinto has decided to withdraw a complaint filed with the Icelandic Competition Authority (ICA) in July 2020 regarding the energy supply for ISAL.
Rio Tinto had asked 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 were able to compete internationally. Rio’s complaint alleged that 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.
ISAL is wholly-owned by Rio Tinto and employs about 500 workers on site. Rio Tinto previously threatened to close the smelter.