LONDON, Mar 07, 2012 (Dow Jones) -- Rio Tinto Alcan, the aluminum division of Rio Tinto PLC (RIO) said Tuesday it will close its Lynemouth aluminum smelter in Northumberland, England on March 29 as part of its aluminum restructure plan and added that it's still in talks to sell the Lynemouth Power Station.
Rio Tinto was forced to book an $8.9 billion impairment charge in 2011 to reflect a fall in the value of the struggling division also known as Rio Tinto Alcan.
The company bought Alcan at the peak of the market in 2007 for $38 billion and has so far written off $18.2 billion of that value. Anglo-Ausralian miner said it's still committed to investing in the division but has embarked on a restructuring that will result in the sale of 13 aluminum businesses, including refineries and smelters in Australia and Europe.
In the case of Lynemouth where a buyer couldn't be found, the company decided to close the smelter.
"I am saddened by the closure of Lynemouth Smelter but we have reached this decision only after a thorough strategic review of the plant and a fair and transparent consultation process," said Jacynthe Cote, chief executive of Rio Tinto Alcan.
Of the 515 people currently employed at the smelter, 323 will be made redundant in May 2012. The remaining employees will continue to work at the smelter until the end of the year, a Rio Tinto Alcan spokesman said.
Thereafter, a core team of around 60 employees will remain on site to work on decommissioning, remediation and regional economic development.
The company said it plans to keep its ship unloading facility at the Port of Blyth open for around 18 months and will use the facility to store and transport raw materials for the Lochaber Smelter in the Scottish Highlands until a more permanent solution is put in place.
"We will now focus on safely decommissioning the plant, working with our employees to mitigate the impact of redundancy," Cote said. "We are [also] in close contact with our customers to limit the impact on their businesses under the scope of our contractual agreements," she added.
Rio Tinto Alcan plans to deploy a Regional Economic Development program to work on long-term regeneration and job creation at the site. The company will also entertain credible expressions of third-party interest in Lynemouth's carbon and casting plants, it said.
Separately, the company said talks on the sale of Lynemouth Power Station are on-going and can't be concluded until the U.K. government gives consent for the plant's continued operation independent from the smelter. Rio Tinto Alcan hopes to complete the sale by the end of the year, the spokesman said.
The coal-fired power station has a power generation capacity of 420 megawatts while the smelter is able to produce 180,000 tons of aluminum annually.