Rio Tinto says wind and solar make economic sense, but LNP stands in way of its plans to save smelters

The head of mining giant Rio Tinto has once again underlined his company’s commitment to renewables, but questions remain about the future of its giant smelters and refineries in Queensland after the new LNP state government put a halt to new wind farm approvals.

The decision by the Queensland LNP – first reported by Renew Economy last week – puts a pause on the approvals of four major wind projects in the state – including the 1.4 gigawatt Bungaban wind project that is essential to Rio’s plans to wean its energy intensive industries off its dependence on coal.

The decision by the Queensland LNP, which follows their refusal in opposition to endorse the previous Labor government’s renewable energy targets, has rattled many in the energy industry.

The state has the lowest share of renewables of any in the country, a situation that would have been unchanged even with Labor’s target of 80 per cent renewables by 2030, but the LNP intervention seems sure to make it even more of a laggard.

It is this daunting prospect – and its potential impact on some of the state’s biggest industries – that may have prompted Rio Tinto CEO Jakob Stausholm make a post on LinkedIn late last week that sought to address the issue.

“The world is growing, so we need to make sure it has enough energy,” Stausholm wrote.

“The reality is that no one is prepared to cut down on their energy usage and you are going to see more renewables enter the global mix.

“Speaking of our own energy transition, cutting carbon emissions is about future proofing the company; our investment in renewables makes economic sense. I think greater competition in this space will soon push the capital costs down for everyone.”

Stausholm’s comments are consistent with others, including Australia’s chief scientist, the head of US energy giant NextEra, and Andrew Forrest, whose renewable energy offshoot Windlab is the owner of the Bungaban project, and who argues that the world need to transition even quicker and reach “real zero” by 2040.

Forrest’s ambitions, and particularly his goal of reaching “real zero” at his Australian iron ore mining operations by 2030, has not been mimicked by his rivals, but it has prompted the likes of Rio Tinto and BHP to accelerate their plans.

But as Stausholm readily acknowledges, Rio Tinto’s future relies on its ability to deliver low carbon or zero carbon products to its domestic and international customers.

If the LNP government stands in the way of that transition, then the obvious conclusion is that there is no future for its assets there, which include the Boyne aluminium smelter, the Yarwun alumina refinery and Queensland Alumina refinery, which together consume more than 10 per cent of their state’s electricity generation.

“Competitive capacity, firming, and transmission, are critical to developing a modern energy system that can ensure more large-scale renewables development in Queensland and help guarantee the future of Australian industry,” Stausholm said at the time of the Bungaban deal announcement nearly a year ago.

That deal between Rio Tinto and Windlab was the largest for any wind project in Australia, and with the longest tenor. Rio agreed to take 80 per cent of the project’s output for a period of 25 years.

Rio Tinto also signed a contract with a 1.1 solar project, the Upper Calliope solar farm to be built by European Energy, in a deal that was also the biggest of its kind in the country.

The other projects affected by the LNP “pause” include the 450 MW Moonlight Range wind project, which was “called in” after having gained approvals just a month earlier.

Another asset, the 1.4 GW Wongalee wind project owned by Andrew Forrest’s Fortescue Metals, was also “paused”, as was the 1.1GW Theodore wind project which is being co-developed by RWE and the state government owned Stanwell.