Mining giant Rio Tinto - which has its loss-making Tiwai Pt
aluminum smelter near Bluff for sale - is considering
shutting a similarly loss-making aluminium refinery in the
Northern Territory, which employs 1600 people.
In both cases, electricity costs play a major part in
determining the plants' futures, against a backdrop of a
global slump in aluminium prices.
At Tiwai, a total target of about 100 jobs losses from 800
staff was achieved recently from redundancies and natural
Rio said on Monday it was considering shutting the Nhulunbuy
plant in the NT's northeast, near Gove, but that would
require building a gas pipeline across the remote Arnhem
Land, at a cost of $A900 million ($NZ1.13 billion), in order
to convert the refinery from heavy fuel to gas, AAP reported.
However, crucial gas supply deals are yet to be secured,
despite the NT having large potential for new gas production.
Tiwai's management, New Zealand Aluminium Smelters, has been
in negotiation over its 27-year electricity supply deal with
state-owned enterprise Meridian Energy, which supplies the
smelter with Manapouri power, accounting for almost 15% of
consumption nationwide, at undisclosed prices.
At Meridian's annual meeting last month, chief executive Mark
Binns said, while details of the talks were confidential, Rio
was told of some amendments Meridian was prepared to make to
the supply deal and others it was not, Stuff reported.
Rio owns 79.4% of the 42-year-old Tiwai Pt smelter and a more
than a year ago bundled Tiwai up with 12 other smelter assets
for sale under the banner of a new subsidiary, Pacific
Six months ago Rio's chief executive, Tom Albanese, met
investors in Sydney and said the aluminium assets in
Australia, New Zealand and France could be vulnerable if poor
market conditions continued. Rio's aluminium division's
profit had dropped 93% in the June half-year compared with
the year before.
At a glance
• NZAS is New Zealand's only aluminium smelter and largest
• Annual production in 2011: 354,000 tonnes.
• NZAS contributes $525 million to the Southland economy
annually and supports more than 3200 direct and indirect
• In 2011, NZAS made $391 million in payments to New Zealand
suppliers, including $51 million to Southland suppliers.