Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Rio Tinto has reached an agreement with Iceland’s largest electricity generator, Landsvirkjun, for the supply of power to its ISAL aluminum smelter under amended terms.


According to a company announcement on Feb 15, the amended power contract will not only allow the aluminum smelter to improve its competitiveness but also increase its cost-efficiency and energy flexibility.


Rio Tinto’s Aluminium chief executive Alf Barrios stated that the company would continue to strengthen the supply of low carbon aluminum from ISAL to its European and North American consumers while making a considerable contribution to Iceland’s economy. 


Rio Tinto Iceland has also withdrawn a complaint filed with the Icelandic Competition Authority in July 2020 regarding the anti-competitive, long-term supply of energy to its smelter. The complaint formed part of a first phase strategic review of the ISAL smelter begun by Rio Tinto in 2020 after a lack of profitability reduced the smelter’s capacity utilization to 85pc. 


At the time, Rio Tinto had threatened to terminate its energy contract and plan an orderly closure of the smelter if Landsvirkjun did not amend the agreement


ISAL Aluminium is a wholly-owned subsidiary of Rio Tinto with a capacity to produce 212,000mt of primary aluminum, which is made into plates for aluminum cladding, sheets for car bodies, lithographic printing plates, aluminum foil packaging, and sheets for use in reflectors.

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