Rio Tinto cancels plans for Malaysian aluminum plant
April 25.04.2012, XNUMX London / Melbourne - The fact that the Australian-British mining giant Rio Tinto does not want to withdraw completely from the aluminum sector became clear at the latest when it became known that the company wanted to build a corresponding plant in Paraguay. However, Rio Tinto seems to want to restructure and reposition the area. Malaysia is also affected by these plans.
Because as was recently known, announced the aluminum subsidiary Rio Tinto Alcan a letter of intent for the construction of an aluminum smelter in the Malaysian state of Sarawek. Two billion dollars were earmarked for the construction of the plant, of which the Rio Tinto subsidiary would have had to raise a billion dollars. The other 50 percent would have been contributed by the joint venture partner Cahya Mata Sarawek Berhard.
Insufficient power supply as the main reason
The decision is certainly not due to lack of funds. Rather, the two companies involved have failed to launch an acceptable energy supply agreement. As you know, the production of light metal is one of the most energy-intensive sectors of all. And in this regard, Paraguay, which generates huge amounts of electricity from hydroelectric power plants, has had the all-important competitive advantage.
In addition, however, the labor costs may have contributed to the decision. In Paraguay, which is still predominantly an agricultural country, the minimum wage is 150 Euro per month. On average, workers in the South American country do not even earn 250 dollars a month. Malaysia can not compete with that, as the country is already far behind Paraguay on its way to becoming an industrial nation.
Rio Tinto will continue to be present in the aluminum sector in the future. However, the restructuring process is likely to continue, as the relatively low world market prices make it extremely important to pay attention to costs. If the Group continues to pursue this path consistently, the sector could again be in the black in the foreseeable future.
(Www.emfis.com)
