Rio Tinto to close NZ aluminium smelter

Rio Tinto has announced it has started planning for the closure of New Zealand Aluminium Smelters (NZAS).

Staff reporter

NZAS, a joint venture between Rio (79.36%) and Sumitomo Chemical Company (20.64%), operates the Tiwai Point aluminium smelter on New Zealand's South Island.

The decision follows a strategic review which concluded the business was no longer viable given high energy costs and a "challenging" outlook for the aluminium industry.

Rio posted an underlying loss of NZ$46 million on the smelter in 2019.

Rio said energy costs were some of the highest in the industry and talks to secure a more competitive power contract had failed.

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.

During the next 14 months, NZAS and Rio will work closely with partners as detailed planning is undertaken to wind down operations, and eventually close the smelter.

The smelter employs around 1000 people directly and creates a further 1600 indirect jobs in Southland.

"We recognise the decision to wind down operations at NZAS will have a significant impact on employees, the community and our customers," Rio Aluminium chief executive Alf Barrios said.

"It is not a decision we have made lightly and without significant careful consideration. It is very unfortunate we could not find a solution with our partners to secure a power price reduction aimed at making NZAS a financially viable business. We will therefore terminate the power contract and move to close the operation."

Rio first initiated the review of NZAS in October 2019. It is also reviewing its ISAL smelter in Iceland.

A growing series of reports, each focused on a key discussion point for the farming sector, brought to you by the Kondinin team.

A growing series of reports, each focused on a key discussion point for the farming sector, brought to you by the Kondinin team.


Mining Journal Intelligence Investor Sentiment Report 2024

Survey revealing the plans, priorities, and preferences of 120+ mining investors and their expectations for the sector in 2024.


Mining Journal Intelligence Mining Equities Report 2023

Access an exclusive, inside look on the quarterly mining IPOs and secondary raisings data and mining equities performance tables with an annual Stock Exchange Comparisons supplement.


Mining Journal Intelligence World Risk Report 2023 (feat. MineHutte ratings)

A detailed analysis of mining investment risks across 121 jurisdictions globally, built on 11 ‘hard risk’ metrics and an industrywide survey.


Mining Journal Intelligence Global Leadership Report 2023: Social licence

Gain insights into social licence trends and best practices from interviews with 20+ top mining company executives and an industrywide survey.