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The man, who asked not to be named, said New Zealand Aluminium Smelter (NZAS) staff held a meeting with some suppliers this week.
That was backed by others spoken to by the Otago Daily Times yesterday.
The man said the meeting was to discuss the levels of stock from suppliers amid uncertainty as to what would happen in the new year.
He said a letter had been sent to contractors advising them of the news.
Another source said all services that did not "directly impact"on the smelter’s functionality would be suspended by the end of the year.
Gore Mayor and Southland Mayor forum chairman Tracy Hicks said while he had "heard" about the letter, he was unaware of its contents.
" I can’t say for sure but I have heard ... some notifications [were] given to contractors."
He said it was "fair to say" Rio Tinto had made clear it would wind down its operation if no resolution was made by Christmas.
It was an anxious time for people in Southland, he said.
"We’ve had certainly reassurances over the past two months that the Government is doing what they can to work with Rio [Tinto].
"We had conversations with Rio [Tinto] who said they are giving us as much as they can ... I can’t do the negotiations, so I can only hope for some progress to be made.
Other sources told the ODT negotiations were at a "sensitive stage".
They went as far as saying some parties were "keeping mum" to avoid affecting any final decision.
Yesterday, a spokesman for Finance Minister Grant Robertson said there was no update on the matter.
"Officials are still talking with Rio Tinto and working towards an agreement."
A Rio Tinto spokeswoman declined to comment.
Invercargill MP Penny Simmonds was disappointed with the lack of progress.
"We are just frustrated that the smelter staff are in limbo like this."
Rio Tinto announced in July it would close the plant near Bluff in August 2021 after it conducted a strategic review.
The review showed the business was "no longer viable given high energy costs and a challenging outlook for the aluminium industry".
During its election campaign, the Labour Party and leader Jacinda Ardern committed to working with Rio Tinto and Transpower to reach an agreement.
The party wanted to keep the smelter open for three to five years to protect about 1000 direct jobs and another 1600 indirect jobs, while also giving the community time to consider and plan its future.