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Released December 12, 2013 | PERTH, AUSTRALIA
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Researched by Industrial Info Resources Australia (Perth, Australia)--Despite months of negotiations that saw the Northern Territory Chief Minister at the time, Terry Mills, travel the world to ensure an adequate supply of natural gas, Rio Tinto Limited (NYSE:RIO) (Melbourne, Australia) has announced its decision to wind down production at the Gove Alumina Refinery and to cancel the construction of the proposed Katherine-to-Gove natural gas pipeline.
The refinery and bauxite mine on the Gove Peninsula, 650 kilometres (400 miles) east of Darwin, has been losing more than $180 million (AUD$200 million) per year, largely due to the high cost of operating diesel generators to power their energy-intensive refinery. The Gove operations, consisting of both a refinery and open pit bauxite mine, produce about 8.2 million tonnes per year of bauxite and 2.6 million tonnes per year of alumina, and are considered one of Rio's worst-performing assets.
Rio had suggested that it would close the refinery if a cheaper energy option could not be found. In response, the territory government negotiated a plan that would see a 500-kilometre (310-mile) pipeline from Katherine and the conversion of the site's power generation from diesel to natural gas. Building the pipeline would cost about $456 million (AUD$500 million), with an additional $456 million required to convert the plant to run on natural gas.
Rio has announced its intention to close the refinery, but to continue operating the bauxite mine. The company has not specified how many jobs will be lost, but 1,500 workers are currently employed at the Gove Refinery, while 350 people are employed at the bauxite operations.
Rio Chief Executive Sam Walsh said the decision would have a significant impact on workers and the Northern Territory itself. "There is no doubt it is a challenging path ahead," Walsh said.
The closure of the refinery is expected to have a serious effect on the nearby town of Nhulunbuy, which has about 4,000 people and relies heavily on the plant for power, housing and employment.
In response to the planned closure, the Australian Workers Union is investigating a legal challenge claiming that under a 2011 agreement, Rio Tinto is legally obligated to keep the refinery open if it is to mine bauxite at the site. At this stage, the Northern Territory government has not revealed if it supports the legal case, but Opposition leader Delia Lawrie has told parliament the agreement shows there is a requirement for Rio Tinto to operate its alumina refinery if it wants to mine bauxite.
View Project Report - 300100303 300125723 300125742
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
The refinery and bauxite mine on the Gove Peninsula, 650 kilometres (400 miles) east of Darwin, has been losing more than $180 million (AUD$200 million) per year, largely due to the high cost of operating diesel generators to power their energy-intensive refinery. The Gove operations, consisting of both a refinery and open pit bauxite mine, produce about 8.2 million tonnes per year of bauxite and 2.6 million tonnes per year of alumina, and are considered one of Rio's worst-performing assets.
Rio had suggested that it would close the refinery if a cheaper energy option could not be found. In response, the territory government negotiated a plan that would see a 500-kilometre (310-mile) pipeline from Katherine and the conversion of the site's power generation from diesel to natural gas. Building the pipeline would cost about $456 million (AUD$500 million), with an additional $456 million required to convert the plant to run on natural gas.
Rio has announced its intention to close the refinery, but to continue operating the bauxite mine. The company has not specified how many jobs will be lost, but 1,500 workers are currently employed at the Gove Refinery, while 350 people are employed at the bauxite operations.
Rio Chief Executive Sam Walsh said the decision would have a significant impact on workers and the Northern Territory itself. "There is no doubt it is a challenging path ahead," Walsh said.
The closure of the refinery is expected to have a serious effect on the nearby town of Nhulunbuy, which has about 4,000 people and relies heavily on the plant for power, housing and employment.
In response to the planned closure, the Australian Workers Union is investigating a legal challenge claiming that under a 2011 agreement, Rio Tinto is legally obligated to keep the refinery open if it is to mine bauxite at the site. At this stage, the Northern Territory government has not revealed if it supports the legal case, but Opposition leader Delia Lawrie has told parliament the agreement shows there is a requirement for Rio Tinto to operate its alumina refinery if it wants to mine bauxite.
View Project Report - 300100303 300125723 300125742
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
