Rio Tinto has written down the value of the Tiwai Point aluminium smelter to just $14.8 million from $806.9 million.
The future of the smelter hangs in the balance as Rio looks to sell many of its ageing Australian aluminium production assets.
The SMH reports the assets will go on sale under the umbrella of Pacific Aluminium. Tiwai Point is just one of these.
The mining giant made the decision to write down the smelter value in February and was revealed with the lodging of financial accounts with the New Zealand Companies Office for Rio Tinto Alcan NZ.
Alcan NZ owns 79 per cent of the smelter, and has run near Bluff since 1971.
Rio Tinto's chief executive Sam Walsh said recently the company would focus two thirds of its asset cuts on its aluminium and energy businesses.
He said the company would have to cut more jobs in Australia in a bid to save $US5 billion by 2014.
No purchaser has come forward and Rio could move to issue Pacific Aluminium shares to its current shareholders to quit the assets.
For the year to December 31, Rio Tinto Alcan NZ accounted an operating pre-tax loss of $91.5 million. Including the writedown and other factors, its loss totalled $677.9 million.
Rio Tinto said the decision to write down Tiwai Point follows its move to decrease the carrying values of many of its global aluminium assets in its 2012 results, as global aluminium markets worsen.
It produced over 8.2 million tonnes of bauxite and 2.65 million tonnes of alumina per year. Former Rio CEO Tom Albanese called Gove a loss making operation.
Aluminium prices dipped 16 per cent in 2012, and the solid local flow added to an 18 per cent decrease in consolidated returns.
High spot electricity prices meant production was also down.
The writedown corresponds to market prediction that Rio would accumulate expenses of about $400 million in site rehabilitation expenses if the smelter were to be shut.
Rio Tinto owns 79 per cent of New Zealand Aluminium Smelters, the smelter holding company. Japan’s Sumitomo Chemical Company owns 20.64 per cent.