Rio Tinto makes $122 million underlying profit from Tiwai Point aluminium smelter in 2022

Rio Tinto, a well-known mining corporation in Australia, has recently announced a significant profit from its aluminium smelter located in Bluff.

The holding company for Rio Tinto's 79% share in the smelter, Pacific Aluminium, has recorded an "underlying" profit of $122 million for the year ending in December, benefiting from high aluminium prices.

This profit, although lower compared to the previous year's $140 million due to the soaring aluminium prices caused by Russia's invasion of Ukraine, marks a significant turnaround from the $100 million underlying loss reported in 2020.

Rio Tinto is currently in talks with power companies to extend the smelter's operation beyond next year when its prevailing low-cost power-supply contracts with Meridian and Contact Energy expire.

Pacific Aluminium's recent financial report noted that their results were impacted by a mixed operating environment. However, higher metal prices and premiums for their high-grade products resulted in a 17.6% increase in revenue, reaching a total of $1.18 billion.

In 2022, aluminium prices averaged US$2703 per tonne or NZ$4,505 per tonne, which was 9% higher than the previous year. Despite this, Pacific Aluminium reported that they had to pay more for raw materials, which are mostly sourced from two refineries owned by Rio Tinto in Australia.

The remaining 21% of the smelter is owned by Japan's Sumitomo Chemical Company. Although aluminium prices have stabilized since June 2022, they have mostly traded in a narrow range of between US$2200 and $2400 per tonne.

The smelter company, New Zealand Aluminium Smelter, separately reports their results to the Companies Office, but these are based on tax-deductible costs rather than revenues and may not accurately reflect the actual annual economics of the business. Despite posting a net loss of $92 million in 2022, the company saw a 38% increase in revenue.