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Hundreds of workers at Rio Tinto's aluminium smelter near Invercargill have to wait until next year to learn if their jobs are safe, as the company aims to cut 14,000 jobs globally.
In response to the economic downturn, Rio Tinto is seeking to reduce its US$38 billion ($71 billion) debt pile by US$10 billion, cut spending and costs, and sell assets.
Rio's smelter at Tiwai Point employs more than 900 staff and contractors, and sustains 2600 jobs and 20 per cent of Southland's economy, the company has said previously.
The smelter is 37-years-old, but produces the purest aluminium in the world. It is operated by New Zealand Aluminium Smelters Ltd (NZAS), nearly 80 per cent-owned by Rio Tinto, and 20.64-per cent owned by Japan's Sumitomo Chemical Co.
Smelter managers were in Brisbane today for a regular quarterly meeting, which was not in response to the announcement, Rio Tinto spokeswoman Diane Collier said.
More specific details would be released at the company's full-year results in February after a review of the business, project by project.
"We're in the very early stages of implementing the measures, so in terms of how that translates at a regional and even local level, we don't have the details about that yet," Ms Collier said.
Invercargill Mayor Tim Shadbolt said he was confident there would be continued demand for the factory's product.
"We just provide such a unique market," Mr Shadbolt told NZPA.
"We produce the purest aluminium in the world at 99.98 per cent, so we tend to supply computers and cell phones and aeroplane wings.
"We've built a little niche that we've sort of sewn up and I can't see anyone producing better quality aluminium than we do anywhere in the world. So I think we'll always keep that - even though it, like everything else in the world, has declined."
Mr Shadbolt expected contractors, rather than full time staff, would suffer most in the event of job cuts.
"Generally speaking, it'll be small engineering companies around Invercargill and Southland who do upgrades, and they (Rio Tinto) will just put it off for about a year."
Rio Tinto has 97,000 employees and 15,000 contractor jobs worldwide, and says the staff cuts will save the company US$1.2b a year.
Last year, NZAS signed an 18-year electricity price agreement with Meridian Energy. The smelter uses about 14 per cent of New Zealand's electricity, and produces around 4 per cent of the country's exports.
Tiwai's output was interrupted this year after the smelter cut production by about 2900 tonnes a month at the start of May, when wholesale power prices were pushed up by drought.
In addition, a transformer failure forced the shutdown of a potline early last month. The Bluff smelter is currently cutting production by 8500 tonnes a month as a result.
- NZPA
