Rio Tinto has prolonged the operation of New Zealand’s only aluminium smelter after signing a power contract the miner says will help its viability.
Rio Tinto on Thursday said it had agreed to an electricity deal with incumbent supplier Meridian Energy, which would make the New Zealand Aluminium Smelter viable until the end of 2024.
Last year, Rio said it would close the smelter due to high energy costs and a challenging outlook for the aluminium industry.
The smelter is at Tiwai Point at the southern end of New Zealand. It produces about 350,000 tonnes of aluminium each year, most of which is exported.
Rio Tinto has a 79 per cent stake in the business, while Sumitomo Chemical Company has 20 per cent.
The miner has been lobbying the New Zealand government to help lower the power costs.
After Rio last year said it would close the smelter, New Zealand Prime Minister Jacinda Ardern said her party wanted to extend operations for three to five years.
This would allow local industry and workers to plan for the future, she said.
Rio Tinto aluminium chief Alf Barrios on Thursday said the Meridian deal would give the company, community, Meridian and the government time to plan.
Meridian chief executive Neal Barclay said he and his colleagues had planned for the end of the smelter.
Rio shares were down 0.55 per cent to $120.08, while Meridian shares were higher by 0.27 per cent to $7.38 at 1530 AEDT.