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Rio Tinto to review future of world’s purest aluminium smelter amid “challenging” market

The Tiwai smelter is located in the Southland region of New Zealand and is responsible for around 1,000 jobs and 10% of the area's economy

Rio Tinto plc - Rio Tinto to review future of world’s purest aluminium smelter amid “challenging” market
Tiwai produces aluminium of 99.98% purity

Rio Tinto plc (LON:RIO) is to review the viability of its aluminium smelter operation at Tiwai Point in New Zealand amid what it says is a “challenging” outlook for the industry.

The smelter is known for producing the world’s purest aluminium at around 99.98% and is responsible for 1,000 jobs directly and about 3,000 indirectly. It also accounts for 10% of the economy of Southland, New Zealand’s southernmost region.

READ: Rio Tinto may become lithium giant after lucky tailings find

The FTSE 100 miner said that due to current market conditions and high power costs, they expected the Tiwai smelter to continue to be unprofitable in the short-to-medium term, although it intends to hold discussions with the New Zealand government and energy providers to try and find ways to restore the site’s viability.

The review, to complete by the first quarter of 2020, will consider all options for the future of the plant, including curbing production and closure.

Alf Barrios, chief executive of Rio Tinto Aluminium, said the industry was currently facing “significant headwinds with historically low prices due to an over-supplied market”, and that other aluminium providers were also reviewing their positions.

The oversupply has caused aluminium prices to drop precipitously over the last 12 months, falling from around US$2,000 per tonne last October to US$1,735 per tonne today.

"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", Barrios added.

Quick facts: Rio Tinto PLC

Price: 4733 GBX

Market: LSE
Market Cap: £59.01 billion

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