Smelter owner Rio Tinto initiates strategic review

Meridian Energy has been advised by New Zealand Aluminium Smelters Limited's (NZAS) major shareholder Rio Tinto, that they intend to initiate a strategic review of the smelter. The review will consider all options for the future of the smelter, including the option of closure. Rio Tinto has advised Meridian that it will provide the market with an update on the strategic review by the end of the first quarter in 2020. The electricity contract between Meridian and NZAS allows for full termination or for NZAS to reduce consumption from 572MW to 400MW, in both cases on 12 months' notice to Meridian. Chief Executive of Meridian Energy, Neal Barclay, says that the parties have been in dialogue for some time and "NZAS officials have advised us that the economics of the smelter have been challenged due to volatile international prices for aluminium, relatively high energy and transmission costs and an upcoming refurbishment bill to keep one of the potlines operational." During that time Meridian had tabled a number of proposed changes and concessions to its existing contract with NZAS. "NZAS has advised Meridian that the changes we had offered to date on our contract fall short of the pricing for delivered energy that NZAS needs to re-establish its position as an internationally competitive aluminium smelter," says Barclay. "We remain open to negotiating with NZAS and its shareholders on the long-term requirements for the smelter." End CA:00343047 For:MEL Type:GENERAL Time:2019-10-23 08:40:44