Smelter speeds up job cuts plan

A ship docked at Rio Tinto's Tiwai Point aluminium smelter in Bluff. Photo / Dean Purcell

New Zealand Aluminium Smelters is accelerating plans to axe 100 jobs from its Bluff smelter as depressed global metal prices continue to challenge the aluminium sector worldwide.

The smelter at Tiwai Point had announced in August last year that it was reducing its workforce of around 750 by 100 positions over a five-year period, but will now complete that process over the next two months, said general manager Ryan Cavanagh.

Some 35 positions had already gone by attrition as staff left the business in recent months.

Rio Tinto owns 79.4 percent of the smelter, which is one of 13 older plants the multinational is seeking to sell from its global portfolio, and is one of several placed under the banner of a new subsidiary, Pacific Aluminium, which includes Australian assets.

As the consumer of around one-seventh of all electricity generated in New Zealand, NZAS also wants to renegotiate the terms of a 27-year electricity contract with Meridian Energy, which is due to take effect from next year.

The smelter, which has been operating since 1971, made losses in the past two financial years, although other Rio Tinto subsidiaries in New Zealand, also allied to the smelter, appeared to be profitable, according to Companies Office records.

NZAS has not responded to questions on this issue from BusinessDesk.

The smelter is currently running only three of its four smelting potlines, meaning about 15 percent of the plant isn't in production.

"The decision to bring forward plans to reduce the size of our organisation has not been taken lightly," said Cavanagh in a statement. Redeployment within NZAS or the wider Rio Tinto group would be explored.

"NZAS is facing tough economic headwinds. Therefore, it is imperative that we take urgent action right across our business to make the smelter resilient in any market conditions," Cavanagh said.

Prime Minister John Key said the job losses were disappointing but a matter for the company.

"They've been signalling that for some time. Unfortunately it reflects what is happening which is international aluminium prices are weaker and company is looking to cut its costs to maintain the rest of its operation in more difficult times.''

Asked whether the job cuts suggested the company wasn't posturing over its pressure to renegotiate its electricity contract with Meridian Energy, Mr Key said while it was well known Rio Tinto was seeking to sell the smelter, it remained an important asset to the company.

He indicated Rio Tinto would find it difficult to renegotiate short term changes to what was a "pretty rock solid'' contract for the next three years.

"It's a very well constructed contract from the Government's point of view.''