Green taxes claim first big victim as 600 jobs axed at Rio Tinto Alcan, Lynemouth

Posted on 17 Nov 2011 by The Manufacturer

Rio Tinto Alcan, the mining and mineral processor, has announced it intends to close down smelting operations at its site in Lynemouth, Northumberland.

Rio Tinto currently employs 515 people at the aluminum smelter in Lynemouth, and another 111 at the nearby power station. The company said that the closure is due to spiraling energy costs and legislation that it claims punishes high energy users.

Jacynthe Côté, chief executive of Rio Tinto Alcan, said, “This decision follows a thorough strategic review which explored every possible option for continuing to operate the smelter and power station. However, it is clear the smelter is no longer a sustainable business because its energy costs are increasing significantly, due largely to emerging legislation. We are hopeful that the power station can remain in operation under new ownership.”

Not shying away from the fate of Rio Tinto Alcan’s employees Mr Côté continued, “For 40 years, the Lynemouth smelter and power station have been important parts of the community and we will work with our employees and other key stakeholders to ensure that the social and environmental consequences of today’s announcement are managed in the most sensitive way.”

Mr  Côté also stated that the company was committed to supporting local initiatives to identify and develop alternative opportunities for company employees. This support will take the form of re-training for skills transfer and job-search assistance. Rio Tinto Alcan says it will strive for these activities to promote regional economic development.

The decision to close the plant is still subject to the completion of a 90-day consultation process with employees and union representatives. However, the company is already in discussion over the potential sale of the power station at the site. There are fears about the knock-on effect the closure will have down the supply chain.

CBI deputy director-general, Dr Neil Bentley, said: “This news shows why the Government must act to insulate manufacturers most at risk from the increasing cost of energy legislation.”

He continued, “Energy intensive companies make the very products the UK needs to move to a low-carbon economy, and are already being hit by rising energy prices and slower demand. The CBI proposes targeting companies most at risk with an exemption from the carbon floor price.”