Will ISAL Aluminum Smelter Close?

Rio Tinto is planning to conduct a strategic review of its aluminum smelter, ISAL, in Straumsvík, Southwest Iceland, in order to assess its ongoing viability and to seek ways to improve its competitive position mbl.is reports.

The review, which is to be completed by mid-year, will take all options into consideration, including reducing production and a possible closure.

Due to an unprofitable performance, production at the smelter has already been reduced to 85 percent of capacity. The smelter is fully owned by Rio Tinto and employs 500 people.

“ISAL is expected to remain unprofitable in the short to medium term in the challenging conditions facing the aluminium industry, due to the smelter’s uncompetitive energy costs and historically low aluminium prices,” a statement on the company’s website reads.

“Rio Tinto will continue discussions with the Government of Iceland and power provider Landsvirkjun on how the smelter can return to profitability and become competitive in the global market,” the statement continues.

The announcement this morning is already affecting employees, for, according to a report just published by mbl.is, a negotiating committee for the employees of the smelter does not have permission to sign a labor contract with the employees. Union representative Reinhold Richter tells mbl.is that high-ranking officials abroad do not give permission for the contract, which has been ready since the end of January, to be signed.