A short announcement by South32 stating that it is reopening an old aluminium smelter in Brazil attracted attention with the news that the smelter will be powered by renewable energy only.
This is significant as mining smelters use a lot of electricity to melt metal ores to produce metals.
In the case of aluminium, the process basically calls for smelting alumina and bauxite concentrate at a temperature of 950°C for a few hours. In addition, smelters need to be big enough to produce viable quantities.
South32 is restarting the Alumar aluminium smelter, also referred to as Brazil Aluminium, together with its joint venture partner Alcoa Corporation.
First production is expected within months, in the June 2022 quarter. Full production will be reached by March next year, when all three pots at the complex will be back in production to produce 447 000 tons of aluminium per annum.
South32 has a 40% share in Brazil Aluminium, with the company saying the cost effectiveness of renewable power will place the smelter in the second quartile of the global aluminium cost curve.
Brazil lends itself to this project as the country as a whole uses mostly renewable energy.
According to statistics from the US Energy Information Administration, 85% of Brazil’s electricity is produced from renewable sources.
Hydro-electric power stations produce 66%, 11% is produced by wind and solar, and 8% comes from biomass power plants. The balance is produced by nuclear plants and fossil fuels.
A spokesman for South32 confirmed that the energy supply has been secured under long-term contracts, while alumina will be sourced from the co-located Brazil Alumina refinery in which South32 holds a 36% interest.
The Mineração Rio do Norte bauxite mine is located in the state of Pará, Brazil. The Alumar alumina refinery and Alumar aluminium smelter are located at São Luís in the state of Maranhão.
The Brazil Aluminium plant has been on care and maintenance since 2015 and will require an investment of around $70 million (around R1.1 billion) during the 2022 and 2023 financial years to restart operations, including capital expenditure of $10 million.
South32’s share of energy for the smelter is 315 megawatts (corresponding to the 40% share of ownership). The smelter will (ultimately) be powered by 100% cost-efficient renewable power from a mixture of wind, solar and hydropower under long-term power contracts.
Strong returns expected
South32 CEO Graham Kerr says the company is excited to participate in the restart of the Alumar smelter using 100% renewable power.
“With the smelter benefiting from existing infrastructure, access to our own supply of alumina, and long-term green energy sources, we expect our investment to deliver strong returns through the cycle.
“We see strong long-term market fundamentals for aluminium,” says Kerr.
“By investing along our existing alumina-aluminium value chain with the smelter’s restart and the expected increase to our shareholding in Mozal Aluminium, we are further integrating our business and meaningfully increasing our share of metal produced utilising green energy.
“With this decision we continue to make substantial progress in reshaping our portfolio, increasing our exposure to the base metals required for the critical transition to a low carbon future.”
In an separate announcement, Alcoa notes that the process to restart the idle plant will begin immediately.
It adds that by 2024, the Alumar smelter will be powered by 100% renewable energy, indicating that Alcoa will use some non-renewable power to restart its portion of the plant before switching to renewables.
Otavio Carvalheira, vice president of operations and Alcoa’s president for Brazil, says putting the smelter back into operation will involve the hiring of at least 750 additional employees and will add to the 850 direct employees at the site’s co-located alumina refinery.