Invercargill mayor Tim Shadbolt is urging the Government to intervene in negotiations between New Zealand Aluminium Smelters and state-owned Meridian Energy.
The Rio Tinto-owned smelter at Tiwai Point has already announced it is cutting 100 jobs to try to save money and has said renegotiating its contract with Meridian is crucial to the plant's future as world aluminium prices plummet.
About 700 people are employed at the Bluff smelter and another 700 are contract workers and upgrades have been shelved in an attempt to keep the operation viable.
But with no resolution after three months of talks, Mr Shadbolt says Prime Minister John Key is showing an appalling lack of commitment to provincial New Zealand and must intervene in talks.
"I mean, they own the electricity company that's sitting around the table and they've got a vested interest in making sure our export industries and manufacturing in this county are supported."
Mr Shadbolt told Radio New Zealand's Morning Report programme on Monday it would decimate Invercargill if the smelter closed and the Government should do everything possible to encourage an agreement.
He says provincial New Zealand is being starved of resources and attention because the focus is on roads, schools and hospitals in Auckland.
"What's throwing the whole of provincial New Zealand out of kilter is the resources that are being poured into roading, hospitals, schools and all the other facilities in Auckland. The rest of us are being starved."
The mayor has the support of the Southland Chamber of Commerce, whose chief executive Richard Haye says the Government is showing a lack of leadership.
Neither the Prime Minister's Office nor Meridian Energy would comment on whether government intervention is needed.