Anglo-Australian mining giant Rio Tinto Group said yesterday it will be winding down production operations at New Zealand Aluminium Smelters (NZAS) due to the firm’s dim predictions of its continuing viability.
According to the firm, a recent review found the operation of the plant wouldn’t likely make a profit in the near future due to energy costs and the state of the aluminium sector in general. Last year the plant cost Rio Tinto NZ$46 million (US$30 million), and Rio Tinto said the world’s highest power prices and grim predictions for the short and medium term of the aluminium market conspired to make the move to begin the 14-month wind-down and closure.
In conjunction with the announcement Rio Tinto indicated that it has given notice to Meridian Energy that it does not wish to renew its contract for electricity, which comes to an end in August of next year. Additionally, the firm explained that talks with other providers proved fruitless as well.
“We recognise the decision to wind-down operations at NZAS will have a significant impact on employees, the community and our customers,” said Rio Tinto’s head of aluminium Alf Barrios.
“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.”
“We are committed to working with our partners as we progress through detailed planning towards closure and we will do all we can together with the government to find ways to support the Southland community,” Barrios concluded.
NZAS is operated by a workforce of 2,600 and is a partnership between Rio Tinto (79.36 percent) and Sumitomo Chemical Company Limited (20.64 percent).