Rio Tinto Alcan and Landsvirkjun sign landmark agreement to extend power contract to 2036

Jun 16, 2010, 14:52 ET from RIO TINTO ALCAN - EN

MONTREAL, June 16 /PRNewswire/ - Landsvirkjun, the Icelandic power utility, and Rio Tinto Alcan have successfully concluded negotiations on a renewed power contract for Alcan Iceland Ltd's aluminium smelter in Straumsvik, Iceland.

The new contract runs to the year 2036 whereas the current contract could be extended to 2024 based on Landsvirkjun and Rio Tinto Alcan reaching an agreement by 2014.

The new contract also provides for 75 MW of additional power, which is one of the conditions needed to carry out a planned amperage increase at the smelter. This project would increase its annual production capacity to almost 230,000 tonnes, an addition of approximately 40,000 tonnes per year.

"This is an important milestone for our plant. The renewal of the current power block and provision of additional power serve to strengthen the long term operation of the smelter," said Rannveig Rist, CEO of Alcan Iceland Ltd. "The smelter in Straumsvik directly employs 450 people and spends approximately ISK 1.5 billion in Iceland every month."

The contract is subject to approval by the respective boards of directors and certain conditions including clarification with respect to taxes paid by heavy industry. These conditions are to be met by 31 August 2010.

The conclusion of these negotiations is a sign of Rio Tinto Alcan's commitment to the continued success and further strengthening of its Icelandic operations, and a testament to the excellent relationship between Landsvirkjun and Alcan Iceland Ltd, which goes back more than 40 years.

About Rio Tinto

Rio Tinto is a leading international mining group headquartered in the UK, combining Rio Tinto plc, a London and NYSE listed company, and Rio Tinto Limited, which is listed on the Australian Securities Exchange.

Rio Tinto's business is finding, mining, and processing mineral resources. Major products are aluminium, copper, diamonds, energy (coal and uranium), gold, industrial minerals (borax, titanium dioxide, salt, talc) and iron ore. Activities span the world but are strongly represented in Australia and North America with significant businesses in South America, Asia, Europe and southern Africa.

SOURCE RIO TINTO ALCAN - EN