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Rio Tinto announces plans to close Tiwai Point smelter

Jul 09, 2020

Rio Tinto has just announced that it will wind down New Zealand Aluminium Smelters, best known as Tiwai Point smelter.

In a statement to the Australian Stock Exchange, the company said its strategic review had "shown the business is no longer viable given high energy costs and a challenging outlook for the aluminium industry."

The company has given Meridian Energy notice to terminate its power contract, which ends in August next year. It expects the wind-down of operations will be done by then.

It said it had had discussions with interested parties but could not secure a power contract that would have kept the smelter competitive and profitable.

The smelter's viability has been questioned for much of the past decade as it grappled with weak metal prices, power costs, and over capacity which has seen smelters closed around the world.

Last year it announced a $46m loss, with chief executive Stew Hamilton saying at the time it had been hit by a 15 percent fall in global prices, but most notably from high power and transmission costs. "No matter how hard or efficiently the team here works, we can't consistently offset the high price of power and transmission charges we face," Hamilton said.

Recently, there has been even more pressure on aluminium supplies globally with the slow down or collapse of aluminium-intensive industries like car manufacturing, aeroplane and aerospace production, due to the Covid-19 pandemic.

Rio Tinto Aluminium chief executive Alf Barrios said the wind-down "will have a significant impact" on workers and the community.

"It is not a decision we have made lightly and without significant careful consideration."

The smelter employs about 1000 people directly and creates a further 1600 indirect jobs in Southland.

More to come...

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