Rio Tinto's $1.7billion write-off of aluminium refineries due to the costs of Australia's carbon...
Rio Tinto has warned the costs of renewable energy could cripple Australia's industrial future as it swallowed a $1.2billion loss and devaluation to its aluminium refineries over the past six months. Ironically one of the refineries now running deeply into the red is Yarwun, which hosted Minister Chris Bowen when he announced the emissions reductions scheme in January that threatens to kill aluminium making in Australia. Under that scheme, which aims to reduce Australia's emissions to net zero by 2050, big carbon emitters such as aluminium refineries must cut 30 per cent of their CO2 output this decade or purchase carbon credits to offset it. Rio CEO Jakob Stausholm on Wednesday said Australia produced nowhere near enough renewable energy to refine aluminium at a large scale - which also sends a warning signal to other high-energy use sectors of the economy. 'Ultimately, if we can't get renewable energy in Australia it's impossible to produce something and export it out of Australia,' Mr Stausholm told , adding he was 'determined to do everything he could' to find a solution. Mr Staushold told that long-term solutions which provided reliable power 'at a competitive price' were the only way to 'future-proof' the aluminium industry. However, he acknowledged that this would be 'complex' given the huge amount of energy needed. Rio chief financial officer Peter Cunningham said Yarwun and the miner's joint venture Queensland Alumina group were hemorrhaging money because of the tightening noose of carbon reductions. 'It is a segment that's been under pressure. Those assets have been, I think, challenged on performance over the last few years,' he said. Despite Rio gaining special allowances under the Albanese government's carbon policy, which requires big emitters to reduce their carbon footprint by 4.9 per cent until 2030, the miner still needs to invest huge amounts on clean technology. 'There's a fair bit of capital needed in those businesses over the next few years as well,' Mr Cunningham said. 'But I think the core final thing I'd say is they remain integral to our system. Because these do give security of supply to our system.' Alumina refining, which involves heating hydrated alumina to extremely high temperatures, accounts for about 3 per cent of Australia's total emissions, which is more than twice the energy used by Tasmania. The Albanese government has allocated $1.4billion to help tide over the sectors of the economy, such as alumina refining, that will struggle to shed their emissions. There is also $2billion being poured into a Hydrogen Headstart program to set up two projects using that energy source, which is touted as a clean alternative to fossil fuels. In announcing Rio earnings of $5.7billion for the half year, which was well down on last year's $8.63billion, Mr Stausholm expressed his gratitude for the government's support. "We are working so hard to work with the government to future-proof these assets for decades to come because there is no doubt that change is necessary,' he said. 'We cannot continue with a level of carbon dioxide emissions from those assets, we need to find a decarbonisation pathway forward that keeps those assets competitive.' Most of Australia's renewable energy comes from wind but it accounts on average for only around 10 per cent of the grid's electricity. Mr Stausholm said solar power was currently nowhere near the scale to meet Rio's needs. 'The kind of solar requirements we have is like 12 times bigger than the biggest solar farm that exists in Australia, so this is something of an enormous scale to make it happen . . . it will take a while,' he said. Rio is pinning its hopes on hydrogen to provide the huge amounts of clean power it needs. The miner has entered into a partnership with Japan's Sumitomo Corporation to build a $111million world-first hydrogen plant. The taxpayer is tipping in $30 million of this cost via the Australian Renewable Energy Agency (ARENA). Announcing this contribution in July Mr Bowen said it would help secure the industry's future. 'Australia is the world's largest exporter of alumina and cutting emissions from our alumina refining will ensure this industry can continue to thrive in a decarbonising global economy,' Mr Bowen said. 'This technology could also pave the way for other hard-to-abate sectors to reduce their emissions.' Rio said it aims to reduce its scope 1 and 2 emissions by 15 per cent by 2025 and 50 per cent by 2030. Other sectors of the Australian economy that face a steep battle to cut their carbon emissions include mines, gas plants and some manufacturing. To meet the strict reduction requirement industries will also have to use more renewable energy, buy carbon credits which fund schemes such as tree planting or find a way to bury emissions with so-called carbon capture.