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Rio Tinto declares force majeure on Aussie alumina due to gas shortage

PUBLISHED

2024-05-21

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Rio Tinto (ASX:RIO) has officially declared a force majeure on alumina shipments originating from its refineries in Queensland, Australia. The decision stems from a shortage of gas necessary to sustain its operations, according to sources familiar with the matter.

The announcement was made to clients on Monday, though the sources requested anonymity when discussing confidential information.

Rio Tinto operates alumina refineries in Queensland, including the Yarwun facility and the Queensland Alumina Limited joint venture with Russia's United Co Rusal International PJSC. However, ongoing challenges with the regional gas supply, compounded by earlier disruptions caused by fires in Queensland, have hindered the refineries' ability to function at full capacity.

The force majeure declaration is expected to impact only third-party sales of alumina, with Rio Tinto's internal aluminum operations remaining unaffected. This strategic decision aims to mitigate broader consequences of the gas shortage on the company's aluminum production.

In the broader context, the announcement occurs amid significant market volatility, particularly in base metals. For instance, copper prices have surged more than 25 percent on the London Metal Exchange since the beginning of the year. Such developments highlight the potential market implications of supply chain disruptions experienced by major players like Rio Tinto.

Rio Tinto's declaration underscores the tangible challenges facing the mining industry, including logistical constraints and environmental risks. Stakeholders will closely monitor how the company navigates these challenges and implements solutions to maintain its operations effectively.

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