Rio Tinto scraps plans to sell smelter

TIWAI PT aluminium smelter’s majority owner, Rio Tinto, has ditched plans to sell the plant after posting a US$1.7 billion (NZ$2.1b) profit within hours of picking up a $30 million dollar subsidy from Kiwi taxpayers.

Rio Tinto owns almost 80 per cent of the smelter in Southland.

The smelter company signed a new secret power deal with state owned Meridian Energy on Thursday, with the Government kicking in a $30m subsidy to ensure the Southland plant, which is part of Pacific Aluminium, continues to the end of 2017.

Labour SOE spokesman Clayton Cosgrove said yesterday that the Government had not bothered to ask Rio Tinto for a jobs guarantee and had been ‘‘walked over yet again’’.

The smelter employs about 800 staff.

While Finance Minister Bill English had said the $30m was to protect jobs, Cosgrove said that was ‘‘a crock’’ because there was no requirement for Rio Tinto to keep jobs secure till 2017.

The Government had scrambled to get the deal done, just to ensure that it could sell Meridian Energy in a partial asset sale, Cosgrove said.

A spokeswoman for English said yesterday that it was not the Government’s business to tell Pacific Aluminium how to run an aluminium smelter.

‘‘Our role, via the one-off payment, was to help ensure the smelter continues in the medium term, and it’s the company’s job to now use that time to try to restore the smelter to viability.’’

The company had been working on restructuring for some time in order to make its operations profitable and that would carry on.

‘‘Labour can’t say on the one hand that the Government should not have intervened, yet say on the other hand that we should be in there in our boilersuits, devising the rosters,’’ the spokeswoman said.

‘‘That is the company’s responsibility.’’

New Zealand Aluminium Smelters chairman Brian Cooper said the aim was to keep the smelter open until the contract terminated in 2030, not just until 2017.

The smelter saved $40m last year and hoped to do the same next year.

Cooper said future cuts were unlikely to come in the form of more redundancies at the plant.

But an announcement on Tuesday that 30 maintenance workers at the smelter faced the axe still stood.

Late on Thursday, New Zealand time, Rio Tinto announced it had returned to profitability in the first half of 2013 but had to sack thousands of workers and slash US$1.5b in costs to get there.

Rio Tinto made a profit of US$1.72 billion in the six months to June 30, down 71 per cent on the same period on 2012. However, it is an improvement from a US$3b fullyear loss posted in 2012.

There was no breakdown of the financial results for the Tiwai Pt smelter in the half year.

The smelter was included in ‘‘other operations’’ which had gross sales of US$2.6b and an underlying loss of $67m, compared with a loss of US$277m in the same period last year.

The reduction in the loss mainly reflected cost savings at Pacific Aluminium.