Rio Tinto could close an unprofitable aluminium smelter on New Zealand’s South Island after prices dropped more than 30 per cent over 18 months amid oversupply of the metal.
The global mining giant on Wednesday said it will conduct a strategic review of its 79.4 per cent interest in the smelter at Tiwai Point south of Invercargill, with closure among its options.
“Under current market conditions and with high energy costs, we expect the short to medium outlook for the aluminium industry to be challenging and this asset to continue to be unprofitable,” Rio Tinto said in a statement.
“Rio Tinto intends to hold discussions with the government of New Zealand and energy providers to explore options and identify economically viable solutions to find a pathway to profitability for the asset.”
The smelter, the remainder of which is owned by Sumitomo Chemical Company, employs about 1,000 people.
“Rio Tinto will work with all stakeholders including the government, suppliers, communities and employees in order to find a solution that will ensure a profitable future for this plant,” Rio Tinto said.
“[But] the strategic review will consider all options, including curtailment and closure, and will be complete in the first quarter in 2020.”