Ottawa reaches Rio Tinto with financial aid offer - support for tariff or billion-dollar investment?
According to a recent report, the Canadian government has entered into critical discussions with Rio Tinto to assess the financial support required to help the company overcome the crushing effect of the US aluminium and steel tariffs.
Industry Minister Mélanie Joly, speaking on July 3 during her visit to Quebec's Saguenay region, confirmed that Ottawa is willing to provide liquidity support to safeguard jobs in Canada's aluminium sector. Businesses need liquidity, and we're ready to help - stated Joly during her meeting with local business leaders.
The previous day, Minister Joly paid a visit to Rio Tinto's aluminium smelter in Arvida, Quebec, where she met with the company's leadership team, employees, and the union, and conveyed the Canadian government's message that its priority is to protect jobs, including those in the aluminium sector in Quebec. And in doing so, it will support businesses with liquidity.
In the meantime, many in the industry have started raising questions about why the federal government is willing to give financial aid to Rio Tinto in particular. Well, Rio Tinto is one of the world's largest mining and metals companies, with a market value of USD 100 billion. And more importantly, the company has a strong presence in Canada, with smelters located in Quebec, Kitimat, and British Columbia. The largest of these is the Alouette smelter in Sept-Îles, Quebec, which has a capacity of 630,000 tonnes per year. And very recently, the smelter has announced a USD 1.1-billion investment in its Sept-Îles facilities over the next 20 years. It has also sealed a 15-year hydro power deal with the state-owned Hydro-Québec.
On July 3, at an event hosted by the Saguenay-Le Fjord Chamber of Commerce, Ms Joly also said that the federal government would like to have conversations with other businesses involved in the aluminium industry.
As of now, there is no further information available regarding the talks between Rio Tinto and the federal government. Neither party responded to a request for comments. Isabella Orozco-Madison, a spokesperson for Ms Joly, explicitly said the government does not have more details to share about those talks at the moment.
However, what seems certain amidst all of this is that the federal government is highly in favour of protecting the domestic aluminium industry in the wake of the United States' staggering tariffs of 50 per cent on aluminium and steel imports, and this talk with Rio Tinto is well aligned with that.
Last month, Prime Minister Mark Carney announced that Canada would limit its aluminium exports and increase domestic utilisation of the metal, in addition to rolling out a 50 per cent tariff on imported aluminium and steel from non-FTA countries to curb excess inflows of those metals into the local markets at artificially low prices.
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