Rio Tinto (ASX: RIO) will keep its Tiwai Point aluminum smelter in New Zealand up and running until at least 2044.

New Zealand Aluminium Smelters (NZAS) signed 20-year contracts with electricity generators Meridian Energy, Contact Energy and Mercury NZ to set pricing for an aggregate of 572 megawatts (MW) of electricity to meet the smelter’s full electricity needs.

The future of the smelter was unclear, after Rio said in early 2021 it would be closed late this year. The company had questioned the viability of the business given high energy costs and the outlook for the aluminum industry.

The new electricity arrangements include 20-year demand response agreements under which NZAS may be requested to reduce electricity consumption by up to a total of 185MW.

 “We are pleased the long-term future of the Tiwai Point smelter has been secured with these agreements, Rio Tinto Aluminium Chief Executive Jérôme Pécresse said in the statement.  “They give us confidence that our New Zealand workforce and assets can continue competitively producing the high purity, low-carbon aluminium needed for the global energy transition.”

The Tiwai Point aluminium smelter will continue competitively producing high-purity, low-carbon metal, backed by a diversified mix of renewable electricity from New Zealand’s South Island, Rio said.

In a separate transaction, Rio Tinto has entered into an agreement to acquire Sumitomo Chemical Company Limited’s (SCC’s) 20.64% interest in NZAS for an undisclosed price. On completion of the transaction, NZAS will be 100% owned by Rio Tinto, the miner said.

Rio Tinto has also entered into an agreement to acquire SCC’s 2.46% interest in Boyne Smelters Ltd (BSL), which owns and operates the Boyne Island aluminium smelter in Gladstone, Australia, bringing Rio’s stake in BSL to 61.85%.

The price was not disclosed.

Source: MINING.COM – Read More