More than 1000 jobs will be lost as Rio Tinto closes an aluminium smelter on New Zealand’s South Island.

New Zealand Aluminium Smelters (NZAS), at Tiwai Point near South Island’s southern tip, will close in August 2021 after a strategic review found the business unviable.

The smelter uses alumina from refineries in Queensland and Western Australia, exporting 90 per cent of its product.

It is also New Zealand’s biggest consumer of electricity, using roughly 10 per cent of the country’s power, and one of the country’s biggest single-site employers.

NZAS has long relied on a supply of cheap power for its viability.


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A $NZ46 million ($A43 million) loss last year prompted a review into its operations.

While the smelter was given an exemption to continue operating through the country’s COVID-19 lockdown, the deteriorating outlook for aluminium use sealed the smelter’s fate.

Rio Tinto Aluminium chief executive Alf Barrios said it “was not a decision made lightly”.

“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,” he said in a statement on Thursday.

“We will therefore terminate the power contract and move to close the operation.”

NZAS claims to contribute $NZ406 million ($A381 million) to the Southland economy each year.

The job losses will devastate Southland, and particularly the nearby city of Invercargill.

Opened in 1971, the smelter was expanded as part of former Prime Minister Robert Muldoon’s “Think Big” interventionist nation-building economic strategy.

Last year, the company was accused of not taking care of its byproduct waste after floodwaters nearly created a crisis at a waste storage facility in the nearby town of Mataura.

NZAS is a joint venture between English-Australian company Rio Tinto (78 per cent) and Japan’s Sumitomo Chemical (21 per cent).