The Tiwai Pt smelter, built to provide a use for the electricity from the remote Manapouri power scheme in Fiordland, has been operating for 40 years.
NZAS spent over $500 million upgrading and expanding the plant in the mid-1990s. It produces very high purity metal, in demand in the aerospace sector.
In the year to August aluminium exports were $1.25 billion, offset by imported alumina and petroleum pitch required to make the carbon anodes consumed in the smelting process.
It uses 12 per cent of the country's electricity. In 2007 Rio Tinto negotiated a new contract with Meridian Energy to run from 2013, when the current contract expires, until 2030. Its terms are confidential but they include escalation factors that reflect wholesale electricity prices in New Zealand and world prices for aluminium.
Rio Tinto Alcan chief executive Jacynthe Cote said the plants identified for divestment were sound businesses, well managed, with productive workforces.
"But they are no longer aligned with our strategy. We believe they will have a solid future under new ownership."
The strategy is to concentrate on "top tier" assets, those with large scale, low costs and long lives.
"The strength of our balance sheet means we can choose the opportune method and timing to divest these assets, which may not occur until the economic climate improves. So we are going to be in no rush," she said.
The businesses going into Pacific Aluminium employ around 6000 people.
"The formation of Pacific Aluminium does not involve any major changes to the employment arrangements of employees at these sites," Cote said.
"It will mainly be business as usual. We understand this will create some anxiety. But the transition will be done extremely respectfully."
The smelters to be divested represent about a third of Rio Tinto Alcan's aluminium smelting capacity.
Cote would not comment on whether the company preferred to sell the Pacific Aluminium assets as a single concern or was inclined to spin it off as a company listed on the Australian Stock Exchange. All options were on the table at this early stage.
Nor would she say whether the company had been talking to anyone interested in acquiring all or some of the assets.
She rejected the inference that the fact that it is smelters in developed countries that are on the block indicates it is now hard to compete with China, which has invested heavily in the sector.
EPIC SCALE
* The Tiwai Pt smelter uses 12 per cent of the nation's electricity supply.
* It produces some of the highest-grade aluminum in the world.
* Aluminium exports were worth $1.25 billion in the year to August.
* Rio Tinto owns a 79 per cent stake.
