Rio Tinto to close Bluff's Tiwai Point smelter within 14 months, 1000 jobs on the line

Rio Tinto is planning to close the Tiwai Point aluminium smelter at Bluff, putting 1000 jobs on the line.

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The owners of the plant have failed in a bid to get cheaper power, so will wind down the smelter. Source: 1 NEWS

It says it will wind down the smelter over the next 14 months ahead of its closure.

The joint venture between Rio Tinto and Sumitomo Chemical Company Limited employs 1000 people directly, and a further 1600 jobs are supported indirectly, it says.

Last year the owners said they were carrying out a strategic review of the site, pointing to "market conditions and high electricity costs".

Chief executive Alf Barrios said at the time aluminium prices were at a historical low.

Similar reasons were given in today's announcement, and as a result, New Zealand Aluminium Smelters had given Meridian Energy notice to terminate its power contract.

The plant is NZ's biggest electricity consumer, using a third of all the electricity supplied in the South Island, and about 13 per cent of the electricity nation-wide.

"Extensive discussions with a wide range of interested parties have failed to secure a power contract that will enable the operation to become both competitive and profitable," Mr Barrios said in a statement.

He acknowledged the impact it would have on the Southland community.

“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."

Meridian Energy chief executive Neal Barclay said it was "disappointing" and acknowledged the effect the closure would have on the Southland community.

"We have worked hard to provide solutions that we believe were of lasting value to the smelter and acceptable to our shareholders," Mr Barclay said.

"Ultimately Rio Tinto has arrived at a different conclusion and has decided to terminate their contract with us.

"As a company we have always known an exit is a possibility and we have planned for it.

"An exit does provide our country with a unique opportunity to accelerate decarbonisation, making way for new growth opportunities across numerous sectors.

"At this time we don't have any further information about Rio Tinto's decision but this decision does give the industry clarity on its future."

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The Invercargill Mayor has been vocal in his opposition to the closure of the plant. Source: Breakfast


The smelter has a patchy history of earning a profit, and in 2012 it suffered a financial loss of $548 million.

In April 2013, Rio Tinto said it was looking at closing the smelter unless a cheaper electricity supply deal could be procured, or the government subsidised its usage.

In August that year, the Government agreed to a $30 million bail out payment to keep the smelter open, on the proviso that it was not closed before January 2017.

The company then indicated in 2015 that it was again looking to close, but Finance Minister Bill English ruled out any further subsidies.

In October 2019, Rio Tinto said it was again assessing the viability of the smelter, with chief executive Stew Hamilton revealing that it had been losing money for the past year.

The company's statement today said that review had concluded that the smelter had lost about $46m in the past year, and that it is no longer economically viable.