Rio Tinto Cuts New Zealand Aluminum Smelter Output By 2,900 Tons/Month

SYDNEY -(Dow Jones)- Rio Tinto Ltd. (RIO.AU) will lower aluminum output at its 350,000-metric-ton Tiwai smelter in New Zealand by around 2,900 tons a month, in a move to conserve energy as dam levels for hydropower generation drop to worryingly low levels.

This follows a drop in output announced on May 2, bringing the total reduction in power demand to 66 megawatts, or about 10% of Tiwai’s annual aluminum production capacity.

Close to 90% of power needs for Tiwai are covered by a long-term contract with Meridian Energy Ltd., while buying the remaining 10% on the spot market.

Rio Tinto owns 79.36% in the smelter, while Japan’s Sumitomo Chemical Co. Ltd. (4005.TO) holds the remainder.

Electricity shortages have cut output at a number of aluminum smelters this year, firstly in China, where snowstorms meant sharply higher demand and difficulty in getting coal to electricity plants.

In South Africa, large industrial consumers, such as miners and BHP Billiton Ltd.'s aluminum smelters in the region, are currently running on 90% of contracted power supply, following years of underinvestment in the country’s electricity generation capacity.