9 Aug 2013

Rio Tinto gives up on selling Tiwai stake

5:54 pm on 9 August 2013

Global mining giant Rio Tinto has abandoned hopes of selling its majority stake in the Tiwai Point aluminium smelter.

The decision follows two years of trying to sell the Southland smelter and some Australian plants without success.

The announcement came as Rio Tinto revealed an 18% fall in underlying profit for six months to $US4.2 billion, along with a loss in its aluminium division.

Rio Tinto says withdrawing the plants from sale will achieve synergies with the rest of the company.

But Auckland mining analyst William Curtayne thinks that, in reality, Rio could not find a buyer and cut its losses due to falling aluminium prices and tough competition from China.

The news comes a day after Tiwai Point on Thursday agreed a deal securing it cheaper prices for the electricity it must buy.

But it still faces challenges to survive in the long term, since 15 other Rio Tinto aluminium plants have been sold or closed down world-wide.

The smelter near Bluff now has three-and-a-half years to become profitable.