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A total of $70 million in capital and maintenance expenditure at the loss-making Tiwai Pt aluminum smelter near Bluff has been halted in its tracks by its Australian owner, mining giant Rio Tinto.
The immediate halt to the $70 million expenditure will come as a further body blow to the local economy. Two weeks ago, New Zealand Aluminium Smelters Ltd (NZAS) confirmed a further 65 staff from its 800 personnel will be made redundant by the end of November; joining 35 jobs lost already to natural attrition.
The $70 million includes $15 million earmarked for work during the rest of this year and 2013, and further underpins growing concerns Tiwai could face closure. Global aluminium prices have slumped hugely in recent months and put the future of ageing smelters, such as the 41-year-old Tiwai, under the spotlight around the world.
NZAS general manager Ryan Cavanagh said halting project work on site was one of several actions taken to try and "return NZAS to viability as quickly as possible".
"NZAS is losing money. We are continuing to work with all of our key suppliers and stakeholders to reduce costs and grow revenues," he said in a statement yesterday.
Work critical to operations, health, safety and the environment would continue and NZAS was working closely with contractors to ensure halted project work was stopped "in a safe and orderly manner".
NZAS is credited with contributing $525 million into Southland's economy annually, or 10.5% of its GDP, supporting more than 3200 direct and indirect jobs, with local suppliers paid $51 million during 2011, NZAS has said.
NZAS wants to renegotiate its existing electricity supply deal with state-owned enterprise Meridian Energy, which supplies the smelter with power from Manapouri; accounting for almost 15% of countrywide consumption, at undisclosed prices.
Rio Tinto, which owns 79.4% of Tiwai, has bundled Tiwai up with 12 other smelter assets for sale under the banner of a new subsidiary, Pacific Aluminium.