Rio Tinto Commissions $1.5 Billion Low-Carbon Aluminium Smelter
0h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
rio-tintoaluminium
Fazen Markets Editorial Desk
Collective editorial team · methodology
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Rio Tinto announced on 29 May 2026 that it has begun commissioning its $1.5 billion low-carbon aluminium smelter in Quebec, Canada. The new AP60 smelter will add approximately 60,000 metric tons of annual primary aluminium capacity using the company's proprietary, energy-efficient technology. This investment directly targets growing demand for sustainably produced materials from the automotive and packaging industries, reinforcing the company's position in the North American market.
The global aluminium industry faces intense pressure to reduce its carbon footprint. Traditional smelting is energy-intensive, accounting for nearly 3% of the world's direct industrial CO2 emissions. Rio Tinto's move accelerates a sector-wide pivot, mirroring Alcoa's 2021 launch of the ELYSIS zero-carbon smelting technology joint venture with Apple.
Current market dynamics heavily favor low-carbon aluminium. Premiums for aluminium produced with renewable energy can be $10 to $15 per metric ton higher than standard primary metal. This premium reflects stringent environmental regulations, like the European Union's Carbon Border Adjustment Mechanism, and corporate net-zero commitments from major consumers.
The commissioning was triggered by the finalization of long-term renewable hydroelectric power agreements with the government of Quebec. Securing this low-cost, clean energy source was the critical enabling factor for the project's economic viability and its classification as a low-carbon product.
The $1.5 billion investment will increase capacity at Rio Tinto's Complexe Jonquière by over 40%. The new AP60 smelter's 60,000-ton capacity brings the site's total production to over 205,000 metric tons per year. Rio Tinto's overall aluminium production guidance for 2026 remains between 3.2 and 3.4 million metric tons.
| Metric | Before Commissioning | After Commissioning |
|---|---|---|
| Complexe Jonquière Capacity | ~145,000 tpy | ~205,000 tpy |
| Rio Tinto's Low-Carbon Capacity | ~2.9 million tpy | ~2.96 million tpy |
The project solidifies Rio Tinto's standing as a top-tier producer. Its average carbon footprint for primary aluminium is approximately 4.0 tonnes of CO2 equivalent per tonne of aluminium, less than half the global industry average of 8.6 tCO2e/t. Competitor Hydro reported a footprint of 4.9 tCO2e/t for its primary metal in 2025.
The additional supply of certified low-carbon aluminium is a direct positive for automotive manufacturers [F, GM] and consumer goods companies. These end-users are scrambling to secure green supply chains to meet sustainability targets. The availability of more North American supply may slightly compress regional premiums over the benchmark LME price.
Aluminium futures traded on the London Metal Exchange (LME) showed little immediate reaction, reflecting the long-term nature of the supply addition. The more significant impact is on the market structure for green premiums, which may face downward pressure as more certified supply enters the market. A key risk is a potential slowdown in electric vehicle adoption, which would dampen demand growth for high-quality, sustainable aluminium alloys.
Investment flow is anticipated towards miners with strong environmental, social, and governance (ESG) credentials in the aluminium sector. This may benefit companies like Alcoa [AA] and Norsk Hydro [NHY.OL], which are also advancing their low-carbon portfolios. Traders are likely to increase long positions in aluminium as a fundamental play on the energy transition.
Market participants will monitor the smelter's ramp-up to full production, expected by the fourth quarter of 2026. Any delays or technical issues could tighten near-term supply for low-carbon aluminium.
The next LME Week in October 2026 will be a critical indicator. Annual contract negotiations between producers and consumers will set benchmark green premiums for 2027, providing a clear signal of demand strength.
Traders should watch the LME aluminium price, with key technical resistance at the $2,800 per metric ton level. A sustained break above this point, coupled with declining exchange inventories, would signal strong underlying demand. The Q2 2026 earnings calls for Rio Tinto [RIO] and Alcoa in late July will offer further guidance on sector margins.
Low-carbon aluminium is primary metal produced with a significantly lower carbon footprint than the industry average. This is typically achieved by using renewable energy sources, like hydroelectric or solar power, for the energy-intensive smelting process. Rio Tinto’s AP60 technology is more efficient than older methods, further reducing emissions per ton of output. This product carries a market premium due to demand from environmentally conscious industries.
The direct impact on the global benchmark LME aluminium price is likely minimal, as 60,000 tons represents a small fraction of the 70-million-ton annual market. The more pronounced effect is on the "green premium" paid for sustainably sourced metal. Increased supply of certified low-carbon aluminium from a major producer like Rio Tinto could moderate these premiums over time, making it cheaper for manufacturers to meet sustainability goals.
Major producers with significant low-carbon portfolios include Alcoa, which is commercializing carbon-free smelting technology through its ELYSIS venture, and Norsk Hydro, which produces large volumes of aluminium using Nordic hydropower. Russian producer RUSAL also markets a low-carbon brand, ALLOW, but its market access has been constrained by geopolitical factors. The sector is increasingly competitive as decarbonization becomes a key differentiator.
Rio Tinto's new smelter accelerates the aluminium industry's necessary shift toward lower-carbon production to meet stringent ESG demand.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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