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Nicholas Grove is a Morningstar journalist.

Rio Tinto (RIO) said it will spend US$2.7 billion completing the modernisation of its Kitimat aluminium smelter in Canada, enabling the US$3.3 billion project to be completed in 2014.

The Kitimat modernisation project will increase the smelter's current production capacity by more than 48 per cent to about 420,000 tonnes a year, the world's second-biggest miner said.

First metal is expected to come on stream in the first half of 2014, with an expected ramp up of nine months, the company said.

The smelter will be powered exclusively by hydropower and use Rio Tinto Alcan's proprietary AP40 smelting technology to reduce carbon dioxide emissions intensity by approximately 50 per cent.

Once completed, Rio Tinto said Kitimat will be one of the most efficient and lowest-cost smelters in the world, and will better position the company to serve the rapidly growing demand for aluminium in the Asia-Pacific market.

In a separate announcement, the miner said it has completed the sale of its Colowyo thermal coal mine in western Colorado to Western Fuels-Colorado LLC for an undisclosed sum.

Rio Tinto said the transaction represents the completion of the sale of all its US thermal coal mines.

Since 2008, Rio Tinto has completed more than 20 divestments with total gross proceeds in excess of US$11 billion.