Tiwai's owner improves but still records loss

Rio Tinto, majority owner of Southland's Tiwai Pt aluminium smelter, has today announced another disappointing result for its New Zealand business.

Rio Tinto Alcan (New Zealand), which operates as Pacific Aluminium, owns 79 per cent of New Zealand Aluminium Smelters.

Its annual financial report for the year ending December 2013 shows an underlying, after-tax loss of $18 million. This was despite the renegotiation of NZAS' power contract with Meridian Energy and the $30 million payment from the government in recognition of the smelter's importance to the stability of the New Zealand electricity market.

However, the result was still better than 2012, when an underlying loss of $49 million was recorded.

The report says the net underlying loss of $18 million was reached after adjustments totalling $85 million were deducted from the statutory profit of $67 million. The adjustments are related to the non-cash changes in the fair value of financial instruments associated with the power contract with Meridian Energy, the report says.

NZAS chief executive and general manager Gretta Stephens said that last year alone, NZAS managed to save $28 million through continuous improvement initiatives.

"While unfavourable economic conditions continue to put considerable pressure on the smelter, we are doing everything in our control to improve our ongoing commercial position," Stephens said.

Last year and so far this year, the smelter continued to face significant challenges from a combination of low international metal prices, the strong New Zealand dollar and the high cost of delivered power, she said.

"We have a proud tradition of employing generations of Southlanders and contributing hundreds of millions of dollars to the New Zealand economy every year and we intend to work as hard as we can so that NZAS can keep making that contribution in the future," Stephens said.

The result does not include the 21 per cent of NZAS owned by the Sumitomo Chemical Company.

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