Rio Tinto will conduct a strategic review of its interest in the Tiwai Point aluminium smelter in New Zealand to determine the site’s ongoing viability and competitive position.
The move comes at a time when the global market for the industry is struggling against high energy costs and declining prices.
Rio Tinto’s overall aluminium production dropped by 2 per cent in the September quarter compared with the previous three-month period. The company has also forecast its annual production to be at the lower end of a 3.2 to 3.4 million tonne guidance.
The New Zealand aluminium smelter (NZAS) is a joint venture between Rio Tinto (79.36 per cent) and Sumitomo Chemical Company.
Under current market conditions, Rio Tinto expects the short to medium outlook for Tiwai Point to be unprofitable, but does intends to explore feasible options for profitability with the New Zealand Government and energy providers.
“The aluminium industry is currently facing significant headwinds with historically low prices due to an over-supplied market,” Rio Tinto aluminium chief executive Alf Barrios said.
“This means that many aluminium providers are reviewing their positions.
“Rio Tinto will work with all stakeholders including the government, suppliers, communities and employees in order to find a solution that will ensure a profitable future for this plant.”
The strategic review will be completed in the first quarter of 2020 and will consider all options for Tiwai Point, including curtailment and closure.