PERTH (miningweekly.com) – Diversified giant Rio Tinto on Tuesday revealed that its aluminium division had delivered about $300-million in cash costs improvements during 2015, along with a $45-million reduction in sustaining capital expenditure (capex) and a $400-million cut in working capital.

“We have made significant advances in transforming our aluminium business, based on the strengths of our exceptional bauxite deposits and world-class aluminium smelting capacity,” said Rio Tinto aluminium CEO Alf Barrios.

Looking to the next year, the miner said that cash would remain a key focus, and the company would work to continue the momentum in operating cost reductions through a broad range of initiatives which should remove an additional $300-million in cash costs from the aluminium division in 2016.

Further improvements would also be made in productivity, with Rio targeting increased output from its operations.

The miner was expecting a 4% increase in bauxite production, to 45-million tonnes, while alumina production would increase by 3%, to 8-million tonnes, and aluminium production would increase by 10%, to 3.6-million tonnes.

“There are short-term challenges, but aluminium is a metal in increasing demand, which will bring the market into balance. Our value-added, low-carbon aluminium has a strong market position, enabling us to capture additional margin and premium throughout the cycle,” Barrios said.

In November, Rio announced a $1.9-billion investment into the Amrun bauxite mine, in Queensland.

The mine, which was previously known as South of Embley, was initially planned to produce about 22.8-million tonnes a year, replacing production from the depleting East Weipa mine and increasing bauxite exports from Cape York by about 10-million tonnes a year.

The project’s design provided options for future expansion to 50-million tonnes a year.

Production and shipping were expected to start in the first half of 2019, ramping up to full production by the end of the year.

Barrios added that the aluminium group’s smelting business was also continuing to improve its cost position through portfolio rationalisation, modernisation and performance enhancements.

The Kitimat aluminium smelter, in Canada, was now ramping up, with 60% of its pots energised.

The $4.8-billion modernisation of the aluminium smelter increased production capacity by 48%, to 420 000 t/y, and would result in the Kitimat smelter becoming one of the lowest cost smelters in the world.

Once the project reaches its full production capacity next year, Rio’s smelting capacity would be positioned in the industry’s first cost quartile.

“We are creating real value as we work through the restructure of the business. We will continue to be relentless on cash generation across the business. Our drive for lower costs, efficient working capital, higher productivity and improved product margins will help deliver sustainable value and cash returns for Rio shareholders through the cycle,” Barrios said.

Meanwhile, Rio CEO Sam Walsh reported that the group’s total capex was expected to reach $5-billion in 2016, compared with the previously forecast $6-billion.

“Our prudent capital allocation and disciplined approach to the balance sheet have reinforced our resilience during this period of ongoing volatility. With all of our investment decisions framed by the need to deliver value for shareholders, we have remained focused on investing in only the best quality projects.”