Rio Tinto, the majority shareholder of New Zealand Aluminium Smelters Ltd., intends to initiate a strategic review on the smelter, which will consider all options for its future, including the option to shut it down.

The decision for a strategic review is due to the volatile international prices for aluminum, relatively high energy and transmission costs, and an upcoming refurbishment bill to keep one of the potlines operational, the smelter's electricity provider Meridian Energy Ltd. said Oct. 23.

The contract between the smelter company and Meridian, which was renegotiated in 2013, runs until 2030 and provides price certainty on 572 MWh per hour of electricity, Meridian said.

The electricity contract allows for full termination or for the smelter to reduce consumption to 400 megawatts from 572 megawatts, in both cases on 12 months notice to Meridian.

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 of 2020.