Smelter firm expects full split

Management of Pacific Aluminium, a business unit of Rio Tinto and the majority shareholder of New Zealand Aluminium Smelters, expects Rio Tinto will divest it as a trade sale or list the entity separately on the Australian stock exchange.

It is already a separate division of Rio Tinto, which the parent company wants to sell.

A source close to the Meridian Energy and Tiwai Pt electricity negotiations told The Southland Times Pacific Aluminium had virtually separated from Rio Tinto as a business.

It had set up all its own systems, management team and advisory board, the source said.

‘‘It’s a separate business from Rio Tinto and its mines. It would like NZAS to be part of its new business with all the other aluminium smelters but Tiwai will need to stand on its own two feet and be viable.’’

It was hard for people to understand Pacific Aluminium did not have the deep pockets like Rio Tinto. It was a smaller focused operation that needed competitive electricity prices in place to ensure its future under a new owner, the source said.

‘‘Pacific Aluminium doesn’t have the security of Rio Tinto’s iron ore, it’s purely an aluminium business so we need to be sure it can stand on its own two feet.’’

If NZAS had a competitive electricity contract in place it could become part of Pacific Aluminium in the future.

‘‘The reality is no potential owner is going to be interested in Pacific Aluminium given the current electricity contact at NZAS.

‘‘If we can’t make it part of our business, we can’t see how anyone is going to be interested in the long-term operation of the smelter,’’ the source said.