NZAS must decide by July 1 on the future of its power contract with Meridian Energy; aluminium prices remain low and NZAS claims it pays some of the highest power prices in the world.
NZAS taking the option to quit Tiwai may be too expensive, with hundreds of millions tied up in remediation costs, but it could reduce its electricity use - which has left the country's main generators in limbo.
NZAS soaks up about 13% of the country's power generation, through Meridian's Lake Manapouri generation.
Having booked a $49million loss in 2012, followed by an $18 million loss in 2013, NZAS yesterday posted a $56 million after-tax profit for its full year 2014, which includes a $17 million revaluation loss over the Meridian Energy contract.
NZAS chief executive Gretta Stephens said the $56 million profit came from a ''brief increase'' in global aluminium prices and market premiums, both of which had since declined. She said while she was proud to run one of the world's ''most efficient smelters'', Tiwai struggled to compete against overseas operations ''which pay a tenth of what we pay in transmission costs''.
''These have increased by $25 million [per annum] over the past seven years with no benefit to our business,'' she said in a statement yesterday.
When NZAS renegotiated its Meridian contract two years ago, it gained a $30 million government handout, given the threat of closure loomed.
Craigs Investment Partners broker Peter McIntyre said Ms Stephens was talking up production costs while negotiating with Meridian for better electricity pricing, but he believed Tiwai ''sat in the middle of the pack'' of smelter costings globally.
While global aluminium prices remained a threat, he did not believe Tiwai would be closed, as Rio Tinto had other smelters which would close before it.
Ms Stephens noted NZAS contributed $525 million to Southland's economy annually, or 10.5% of the province's gross domestic product, supported more than 3200 direct and indirect jobs and last year made $366 million in payments to New Zealand suppliers, including $47 million in Southland.
''It is one of two smelters in the world producing ultra-high purity aluminium and the only one producing this using electricity generated from renewable sources,'' she said.
• A note in the full financial report stated if Rio Tinto publicly announced ''a review of the ongoing viability'' of Tiwai before June 30 this year, the $30 million Government ''cash incentive'' would have to be repaid.
