Rio Tinto will extend operations at the Tiwai Point aluminium smelter in New Zealand until 2024 thanks to a new electricity agreement struck with Meridian Energy.
Both companies have agreed on power prices that make the smelter economically viable over the next four years.
Rio Tinto stated it was still progressing discussions with the New Zealand Government’s commitment to address the smelter’s high transmission costs.
The company announced last year that it would wind down operations at Tiwai Point by August this year due to high energy costs.
Rio Tinto Aluminium chief executive Alf Barrios said the company was pleased to have reached an agreement that would enable the Tiwai Point smelter to continue producing some of the lowest carbon aluminium in the world.
“This agreement improves Tiwai Point’s competitive position and secures the extension of operation to December 2024,” he said.
“It also provides Rio Tinto, the New Zealand Government, Meridian, and the Southland community more time to plan for the future and importantly gives our hard-working team at Tiwai and our customers the certainty they deserve.”
Meridian chief executive Neal Barclay said the company had worked hard to provide solutions that it believed were of lasting value to the smelter and acceptable to our shareholders.
“We’re pleased that Rio Tinto has accepted the offer, which will now provide certainty for the Southland community,” he said.
“As a company we have planned for the eventual exit of the Tiwai Smelter. We’re excited about the opportunities that we have to accelerate decarbonisation, and we’re actively developing new growth opportunities.”
Plans for eventual closure of the Tiwai Point smelter will include stakeholder consultation, including within the Southland community and reflect the company’s closure and remediation standards, according to Rio Tinto.
The Tiwai Point smelter is owned by Rio Tinto (79.4 per cent) and Sumitomo Chemical Company (20.6 per cent) via the New Zealand’s Aluminium Smelter (NZAS) joint venture.
It contributes $NZ406 million ($377 million) to the Southland economy, representing 6.5 per cent of Southland’s GDP, and employs around 990 full time equivalent employees and contractors.