In the new global context of the aluminum market, where the wave height is expected to become normality, Rio Tinto (RT) intends to pull out of the game by focusing on the production of specialty aluminum for superior margin, a market of 14 million tonnes growing.
Faced with this new reality that requires optimization and greater flexibility of operations, Étienne Jacques, Chief of Primary Metal operations, calls for the opening of a constructive dialogue with leaders and regional decision makers. The approach aims to achieve common goals such as the extension of the useful life of the Vaudreuil plant with its storage site bauxite residue, the future decree on the management of Lac Saint-Jean banks and trading new electricity supply contracts with Hydro-Québec.
Guest speaker before 125 members of the Chamber of Commerce Saguenay Tuesday Étienne Jacques painted a realistic picture of the new global context in the aluminum market. He mentioned that the producers face a complete reconfiguration of the market causing the closure of many smelters around the world. At the same time, the gray metal demand is growing and prices fall. A situation that is completely paradoxical from an economic point of view. According to him, 33% of global aluminum production is currently at a loss and if the price per ton was $ 1400, 75% of global factories would turn to loss.
These changes are caused by China. In recent years, it has developed the largest aluminum industry in the world with a capacity of 25 million tons, becoming either an aluminum importer, but an exporter like Russia and the Middle East. The economic slowdown in China, which experienced annual growth rates of its 10% of GDP to 12% and who returns to 5%, adds to the pressure. “We are in another world. In English, they say “the new normal” and now need to move in this new normal, “said Mr. Jacques.
Facing the situation, RT has decided to adopt a new strategy based on three specific strengths. The first key market. RT aims to address, among others, the needs of North American markets that import around 1.9 million tonnes of aluminum overseas, including automotive industries and transportation.
The second is the quality of the workforce, the efficient plants and access to hydro park will produce the greenest aluminum in the world, an asset that is not yet cash value, says Mr. Jacques.
The RT boss in the region said that the company will continue to reduce its operating costs as it did in 2015 with a 20% discount.
Now, RT does not want to be a pig production company and wholesale volume and intends to produce special alloys and high purity metal for aerospace, rods for the son and cables industry, billets the construction of doors, windows, sheet ingot, “T” foundry for the production of cast wheels and parts and “T” overhaul.
“We put in operation the plant Ingot Petit Saguenay where it flows from small ingots for the automotive industry. We have become nimble, creative, dynamic. We are no longer in the “rough” that anyone can do. One is in the value-added product that requires expertise, “says Jacques.
Better connect the region
Étienne Jacques considers normal that Rio Tinto (RT) makes the time criticized because in other attempts to play two moves ahead to ensure its future in an economic climate more and more complex.
However, he believes that regional and business people need to better connect to build consensus on the objectives.
Mr. Jacques recalled that in 2015, the company has announced investments of $ 315 million to consolidate the operations of its regional plants and development of new technologies such as the AP44 platform in Alma, studies to increase Factory Laterriere, repairing the furnace Riedhammer of Great Bay and the Energy Power plants, besides the establishment of the aluminum center operational control over 3,000 electrolytic cells in North America and Europe.
“It becomes more difficult to understand we want to play two shots ahead. It is more difficult to understand that it’s going well. There are elements disconnect between what is long term and the reality on the ground. ”
He cited the example of the expansion project of the storage site of red mud which require an investment of $ 250 million and will allow the Vaudreuil plant to operate until 2047. “Think about it! It offers something for 25 years. ”
He said that in 90 years of operation of the current site, no incident leading to disasters were reported in the annals although the Saguenay River took reddish color twice.
With the new context of the aluminum industry, Jacques argues that many parts of the world are struggling to keep their smelters and he would like Vaudreuil and the banks of the folder become a collective issue and ambition for the region. “You have to give a vision we share and leadership that unites us. ”