Rio Tinto to close New Zealand smelter, 1,000 jobs to go

WELLINGTON • Anglo-Australian mining giant Rio Tinto Group announced yesterday that it will close its New Zealand smelter with the loss of at least 1,000 jobs, saying the operation is no longer economically viable.

New Zealand Aluminium Smelters Ltd (NZAS), the largest employer in the southern New Zealand province of Southland, lost NZ$46 million (RM127.80 million) last year.

A strategic review by Rio Tinto found the factory was no longer viable “due to energy costs that are some of the highest in the industry globally”, coupled with a challenging short-to medium-term aluminium outlook, the company said in a statement.

It said it would wind down operations over the next 14 months.

Rio Tinto Aluminium CEO Alf Barrios said the firm recognised the decision would have a significant impact on employees and the local community.

NZAS is a joint venture between Rio Tinto and Sumitomo Chemical Co Ltd of Japan that employs around 1,000 people directly and accounts for a further 1,600 indirect jobs in the area.

Rio Tinto owns almost 80% of the operations, while Sumitomo has a 20% stake.

“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,” Barrios said.

“We will, therefore, terminate the power contract and move to close the operation.”

The smelter is New Zealand’s largest electricity user, accounting for about 13% of the country’s entire output.

It has faced difficulties before and received a NZ$30 million from the government bailout in 2013 in return for Rio Tinto guaranteeing it would stay open for another four years.

The government has since said it would not offer more financial support. — AFP