Rio Tinto to close NZ aluminium smelter

Marco Green
July 11, 2020

Rio first initiated the review of NZAS in October 2019. "We will, therefore, terminate the power contract and move to close the operation", he added.

The smelter is "not economically viable due to energy costs that are some of the highest in the industry globally, coupled with a challenging short to medium term aluminum outlook", the Anglo-Australian miner said in a statement.

According to Rio Tinto, extensive discussions with interested parties have failed to secure a power contract that will enable the operation to become competitive and profitable.

It said it would wind down operations over the next 14 months.

Rio Tinto shares were 0.7% higher at 4,645.50 pence each in London on Thursday morning.

The impact of this decision on the Southland economy will be significant. The smelter employs around 1,000 people directly and creates another 1,600 indirect jobs in the Southland region.

"This day has unfortunately been on the cards for some time now, but nevertheless the final decision is a blow to Southland and all those who work at the smelter", Finance Minister Grant Robertson said.

The company said profit for the year ended June 30 will be more than $8.7m, although it won't formally report its result until April.

Regional Economic Development Minister Minister Shane Jones says there are options that can be worked through.

Rio has been threatening to shutter the smelter for years as it demanded further subsidies from the government.

NZAS has given Meridian Energy notice to terminate the power contract, which will end in August 2021, when the wind-down of operations is expected to complete.

In 2013, the smelter received a $NZ30 million (around A$28 million) bailout from the government, as long as Rio keeps it open for another four years.

Genesis Energy also called the closure disappointing, stating that it would mark a fundamental shift in the New Zealand electricity market. The increased supply will also have a positive impact on prices.

"We're very disappointed to have played our part in delivering these savings for one of the greenest smelters in the world and to have such limited engagement from Rio Tinto".

Other reports by Click Lancashire

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