Rio Tinto has announced that it plans to conduct a strategic review of its interest in New Zealand’s Aluminium Smelter (NZAS) at Tiwai Point, to determine the operation’s ongoing viability and competitive position.
NZAS is a joint venture between Rio Tinto (79.36 per cent) and Sumitomo Chemical Company Limited of Japan (20.64 per cent). It is New Zealand’s only aluminium smelter and began operations in 1971.
The plants produces primary aluminium in the form of ingot, billet, and rolling block. The majority of the plant’s alumina is supplied from the Rio Tinto Yarwun and Queensland Alumina refineries at Gladstone in Queensland. Approximately 90 per cent of the aluminium produced is exported, with the largest market being Japan.
Rio Tinto states that under current market conditions and with high energy costs, they expect the short to medium outlook for the aluminium industry to be challenging and this asset to continue to be unprofitable.
The company 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 strategic review is expected to consider all options – including curtailment and closure – and be complete in the first quarter in 2020.
Rio Tinto Aluminium Chief Executive, Alf Barrios, said the aluminium industry is currently facing significant headwinds with historically low prices due to an over-supplied market.
“This means that many aluminium providers are reviewing their positions,” he commented.
The smelter currently employs around 1000 people.