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Rio Tinto (RIO) Invests $179M in Carbon-Free Aluminum JV
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Rio Tinto (RIO - Free Report) is set to install carbon-free aluminum smelting cells at its Arvida smelter in Québec, Canada, thus utilizing the first technology license issued by the ELYSIS joint venture. The groundbreaking ELYSIS technology aims to eliminate all direct greenhouse gases (GHGs) from the conventional aluminum smelting process, by producing oxygen as a byproduct while improving efficiency by producing more aluminum at lower costs. This pilot operation is expected to be a pivotal step in the large-scale industrialization of the ELYSIS technology and will strengthen Rio Tinto’s industry-leading position in low-carbon aluminum production.
RIO has formed a joint venture with Québec’s government and will design, engineer and build a demonstration plant featuring 10 pots operating at 100 kiloamperes. This requires a total investment of $285 million, with Rio Tinto’s share being $179 million. The balance funding will be made by Québec’s government through Investissement Québec.
The plant will have an annual production capacity of up to 2,500 tons of commercial-quality aluminum without direct greenhouse gas emissions. The first production is targeted by 2027.
Aluminum is lightweight and has a high strength-to-weight ratio and good conductivity, which make it ideal for various industries. Also, its 100% recyclability makes it a valuable metal for sustainable practices and a critical component for the energy transition. However, on the flip side, aluminum production contributes to around 3% of the world’s direct industrial CO2 emissions, according to the International Energy Agency. With demand for aluminum projected to surge almost 40% by 2030, decarbonizing the production process is the need for the hour.
To lower the aluminum industry’s carbon footprint, Rio Tinto and Alcoa (AA - Free Report) formed ELYSIS, a technology partnership, in 2018. The technology was first developed at the Alcoa Technical Center . The ELYSIS carbon-free smelting technology, which emits oxygen, also incorporates the latest in next-generation smelting cell design from Rio Tinto. The combination of these two innovations has led ELYSIS to develop an industrial breakthrough technology enabling sustainability and performance. The technology can be used in both new and existing aluminum smelters and will also reduce operating costs while boosting production capacity.
In November 2021, ELYSIS achieved a major milestone by successfully producing aluminum without any direct GHG emissions at its Industrial Research and Development Center in Saguenay, Quebec, Canada. This paved the way for the granting of the first smelter license to Rio Tinto. The ELYSIS joint venture is currently continuing its research and development work to scale it up to its full potential.
In Canada alone, the ELYSIS technology has the potential to reduce GHG emissions by 6.5 million metric tons, which is the equivalent of removing 1.8 million cars from the roads.
Rio Tinto produces some of the highest quality, lowest-carbon footprint aluminum in the world. It produced a total of 826 kt of aluminum in the first quarter of 2024, which was up 5% year over year. In 2023, Rio Tinto’s aluminum output was 3.27 Mt and it expects aluminum production to be between 3.2 Mt and 3.4 Mt in 2024.
Price Performance
In the past year, shares of Rio Tinto have gained 1.7% against the industry’s 3.1% decline.
Image Source: Zacks Investment Research
Zacks Rank and Stocks to Consider
Rio Tinto currently carries a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for Ero Copper’s 2024 earnings is pegged at $1.66 per share. The consensus estimate for 2024 earnings has moved 20.3% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 53.9%. ERO shares have gained 2.5% in a year.
The Zacks Consensus Estimate for ATI’s 2024 earnings is pegged at $2.41 per share. The consensus estimate for ATI’s current-year earnings has been revised 3% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 8.3%. The company’s shares have gained 24% over the past year.
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Rio Tinto (RIO) Invests $179M in Carbon-Free Aluminum JV
Rio Tinto (RIO - Free Report) is set to install carbon-free aluminum smelting cells at its Arvida smelter in Québec, Canada, thus utilizing the first technology license issued by the ELYSIS joint venture. The groundbreaking ELYSIS technology aims to eliminate all direct greenhouse gases (GHGs) from the conventional aluminum smelting process, by producing oxygen as a byproduct while improving efficiency by producing more aluminum at lower costs. This pilot operation is expected to be a pivotal step in the large-scale industrialization of the ELYSIS technology and will strengthen Rio Tinto’s industry-leading position in low-carbon aluminum production.
RIO has formed a joint venture with Québec’s government and will design, engineer and build a demonstration plant featuring 10 pots operating at 100 kiloamperes. This requires a total investment of $285 million, with Rio Tinto’s share being $179 million. The balance funding will be made by Québec’s government through Investissement Québec.
The plant will have an annual production capacity of up to 2,500 tons of commercial-quality aluminum without direct greenhouse gas emissions. The first production is targeted by 2027.
Aluminum is lightweight and has a high strength-to-weight ratio and good conductivity, which make it ideal for various industries. Also, its 100% recyclability makes it a valuable metal for sustainable practices and a critical component for the energy transition. However, on the flip side, aluminum production contributes to around 3% of the world’s direct industrial CO2 emissions, according to the International Energy Agency. With demand for aluminum projected to surge almost 40% by 2030, decarbonizing the production process is the need for the hour.
To lower the aluminum industry’s carbon footprint, Rio Tinto and Alcoa (AA - Free Report) formed ELYSIS, a technology partnership, in 2018. The technology was first developed at the Alcoa Technical Center . The ELYSIS carbon-free smelting technology, which emits oxygen, also incorporates the latest in next-generation smelting cell design from Rio Tinto. The combination of these two innovations has led ELYSIS to develop an industrial breakthrough technology enabling sustainability and performance. The technology can be used in both new and existing aluminum smelters and will also reduce operating costs while boosting production capacity.
In November 2021, ELYSIS achieved a major milestone by successfully producing aluminum without any direct GHG emissions at its Industrial Research and Development Center in Saguenay, Quebec, Canada. This paved the way for the granting of the first smelter license to Rio Tinto. The ELYSIS joint venture is currently continuing its research and development work to scale it up to its full potential.
In Canada alone, the ELYSIS technology has the potential to reduce GHG emissions by 6.5 million metric tons, which is the equivalent of removing 1.8 million cars from the roads.
Rio Tinto produces some of the highest quality, lowest-carbon footprint aluminum in the world. It produced a total of 826 kt of aluminum in the first quarter of 2024, which was up 5% year over year. In 2023, Rio Tinto’s aluminum output was 3.27 Mt and it expects aluminum production to be between 3.2 Mt and 3.4 Mt in 2024.
Price Performance
In the past year, shares of Rio Tinto have gained 1.7% against the industry’s 3.1% decline.
Image Source: Zacks Investment Research
Zacks Rank and Stocks to Consider
Rio Tinto currently carries a Zacks Rank #3 (Hold).
A couple of better-ranked stocks from the basic materials space are Ero Copper Corp. (ERO - Free Report) and ATI Inc. (ATI - Free Report) . ERO sports a Zacks Rank #1 (Strong Buy) at present and ATI carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Ero Copper’s 2024 earnings is pegged at $1.66 per share. The consensus estimate for 2024 earnings has moved 20.3% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 53.9%. ERO shares have gained 2.5% in a year.
The Zacks Consensus Estimate for ATI’s 2024 earnings is pegged at $2.41 per share. The consensus estimate for ATI’s current-year earnings has been revised 3% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 8.3%. The company’s shares have gained 24% over the past year.