Rio Tinto (ASX: RIO) will conduct a strategic review of its interest in the Tiwai Point smelter in New Zealand operated by New Zealand Aluminium Smelters (pictured).
The review will consider what is NZ’s only aluminium smelter’s ongoing viability and competitive position, according to a statement released today.
The company said: “Under current market conditions and with high energy prices, we expect the short to medium outlook for the aluminium industry to be challenging and this asset to continue to be unprofitable.
“Rio Tinto expects 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 is a joint venture between Rio Tinto, which owns 80 per cent of the venture, and Sumitomo Company Ltd and employs 1,000 people.
Its inputs are bauxite imported from Australia and hydroelectricity – the smelter consumes 13 per cent of New Zealand power production.
Production in 2015 was 335,290 tonnes of ultrahigh purity aluminium.
Rio aluminum chief executive Alf Barrios said the sector was facing historically low prices due to oversupply, with many producers reviewing their positions.
He said the review would consider all options including curtailment and cllosure, and would be finished in the first quarter of 2020.
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