NT town braces for refinery news PDF Print E-mail
Friday, 25 January 2013 08:11

The Northern Territory outback town of Nhulunbuy is waiting anxiously for news of whether mining giant Rio Tinto will keep its alumina operation going.

Nhulunbuy, a satellite town of the Gove alumina refinery and bauxite mine, is facing a devastating blow, with analysts claiming a government bid to save the refinery may be too little too late.

The refinery has recently been losing approximately $US30 million each month, or about $200 million in the past 12 months.

Western Australia state manager of Patersons Securities, Lewis Fellowes, expects Rio Tinto to mothball the site.

"Is Rio Tinto prepared to continue to operate on a plant that is currently losing $US30 million per month for at least the next 18 months in the current aluminium environment?"

"My answer to that is no," Mr Fellowes told AAP.

Independent gas analyst Peter Strachan said Rio Tinto under new managing director Sam Walsh would be more likely to shut down the site.

Once closed, it was unlikely Rio would ever re-open it, he said.

"It will be like a dog going back to its own vomit," he said.

The miner has said a report on the viability of the Gove operation will be completed before the end of January.

Rio Tinto subsidiary Pacific Aluminium that runs the Gove plant has sought assurances from the territory government that the diesel-fuelled plant can be converted to run on natural gas, but such a move could lead to a gas shortage in the NT.

The NT government on Wednesday came back to the company with a proposal that would involve giving them an allocation of gas, so long as reserves can be found elsewhere.

Mr Strachan said under the government's plan it would probably take at least two and a half years for any new gas discovery to be exploited, with a long lag before a pipeline could take the gas to Gove.

Rio Tinto has indicated it wants to write down $US14 billion ($A13.34 billion) in assets, mostly from its aluminium division, and an announcement on the writedowns is expected on February 14 when the company's annual results are released.

Dave Suter from the Nhulunbuy Chamber of Commerce and Industry said businesses in the town were concerned.

"If you take 800 men out of the refinery and the associated families, which is probably about 1500 or 1600 including kids, out of a town of 3500 people, then you have a bit of a crisis, so to speak," Mr Suter said.

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