Rio Tinto Alcan moves forward with $347 million project to modernise and increase production capacity at its Iceland smelter

MONTREAL, Sept. 23 /PRNewswire/ - Rio Tinto Alcan will move forward with its planned $347 million modernisation project to increase the annual production capacity of its aluminium smelter in Straumsvik, Iceland (ISAL), after finalising the landmark energy supply agreement reached earlier this year with Landsvirkjun, the Icelandic power utility.

The new contract will apply from 1 October 2010 and will run until 2036. The contract provides for 75 MW of additional power and for the continued supply of energy currently purchased by ISAL under various agreements, allowing Rio Tinto Alcan to carry out an amperage increase at ISAL. The increased amperage is part of the modernisation project that will boost production capacity at the smelter by 20 per cent to approximately 230,000 tonnes and ensures continued compliance with emission limits and reliability of operations.

"We are building on a successful relationship in Iceland that goes back more than 40 years. The $347 million investment was facilitated by working together with local stakeholders to ensure the long-term sustainability of the smelter. ISAL directly employs 450 people and spends approximately ISK 1.5 billion in the country every month. This investment is great news for Rio Tinto Alcan and for Iceland," said Jean-Philippe Puig, president, Primary Metal, Europe, Middle East and Africa, Rio Tinto Alcan.

"Expanding the production capacity at ISAL is in line with Rio Tinto Alcan's strategy to develop our top-tier assets. We will leverage ISAL's clean energy source, low CO2 emissions, strong performance on health, safety and the environment and demonstrated reliability in delivering high quality products to our customers," said Jacynthe Côté, chief executive, Rio Tinto Alcan.

"We are proud to invest in the future of ISAL. The hundreds of jobs required for the execution of this project will be a welcome and well-timed addition for the local economy, and the long-term effect of reinforcing our position as one of Iceland's main exporters is mutually beneficial," says Rannveig Rist, general manager of ISAL.

ISAL is expected to commence the gradual increase of its production in April 2012 and complete the production increase by July 2014.

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