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Rio Tinto increases VAP aluminum output in Q3 on market recovery


Proportion of output sold as VAP rises to 45% in Q3

Total aluminum production in the quarter stable on year

Pittsburgh — Rio Tinto's proportion of primary aluminum sold as value-added products increased to 45% in the third quarter from 40% in the first half of the year due to improving market conditions, the company said Oct. 16.

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"The automotive sector is continuing to see recovery, supporting some demand for value-added aluminum products, but remains below pre-COVID-19 levels globally," Rio Tinto said in a quarterly production report.

The international metals and mining company said 52% of its primary aluminum was sold as VAP in Q3 2019.

In its second quarter report, Rio Tinto said a portion of its VAP output was substituted with standard ingot P1020 products in response to shifting market needs and lower demand in the automotive industry.

The London-based company produced 797,000 mt of aluminum from its global operations in Q3, up 1% year over year and up 2% from the previous quarter.

"Our aluminum business continues to demonstrate operational stability and performance across the supply chain, despite the continued impact of COVID-19," Rio Tinto said. "The Becancour smelter in Quebec, Canada, is operating close to full capacity and good progress has been made on the pot relining at the Kitimat smelter in British Columbia, Canada."

Rio Tinto's Q3 output exceeded the 752 mt production forecasted by analysts with Jeffries, according to a research note from the firm.

In Canada specifically, Rio Tinto's third-quarter aluminum production from its six wholly-owned smelters slipped 6% from the year-ago period to 375,000 mt. In addition, Rio Tinto reported aluminum output totaling 63,000 mt at its 40%-owned Alouette smelter and 26,000 mt at its 25%-owned Bécancour smelter. Both smelters are located in Quebec.

Rio Tinto said its ISAL smelter in Iceland continues to operate at 85% of capacity as the company continues discussions on energy pricing with stakeholders to ensure the sustainability of the facility.

"In July 2020, we submitted a complaint to the Icelandic Competition Authority, alleging abuse of market dominance by energy supplier Landsvirkjun," Rio Tinto said. "This case is ongoing, pending a hearing with the ICA."

The Tiwai Point smelter in New Zealand operated at about 90% of its capacity in Q3 as the plant prepares to cease operations in 2021, Rio Tinto said.

"Discussions continue with the New Zealand Government and Meridian Energy on next steps relating to the wind-down of operations and eventual closure of the Tiwai Point Aluminium Smelter," Rio Tinto said.