[ferro-alloys.com]Rio Tinto will wind-down operations at its New Zealand Aluminium Smelter or NZAS with plans to close the facility by August 2021 following the conclusion of its strategic review, the company said July 8.

"It is not a decision we have made lightly and without significant careful consideration," Alf Barrios, Rio Tinto Aluminium's chief executive, said in a statement. "We are committed to working with our partners as we progress through detailed planning towards closure, and we will do all we can together with the government to find ways to support the Southland community."

Rio Tinto said the smelter was no longer viable due to high energy costs and a challenging outlook for the global aluminum industry.

Specifically, NZAS faced some of the highest energy costs among global aluminum industry operations, according to the company.

The diversified metals and mining company said it has given Meridian Energy notice to terminate the power contract with the smelter after discussions with various parties failed to result in an energy agreement that would support the plant's competitiveness and profitability.

"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.

The current power contract between NZAS and Meridian is set to end in August 2021 when the wind-down of the smelter's operations is expected to complete.

As the result of a strategic review of NZAS announced in October 2019, Rio Tinto said it attributed a NZ$46 million ($30.26 million) underlying loss to the smelter for fiscal year 2019.

Rio Tinto's planned closure of its New Zealand aluminum operations follows Alcoa's announcement in April that it would idle its Intalco smelter in Ferndale, Washington, by the end of July.

NZAS, also known as the Tiwai Point smelter, produced 351,000 mt of primary aluminum in 2019.

(S&P Global Platts)

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