Rio Tinto's Pacific Aluminium (New Zealand) unit tripled annual earnings from its controlling stake in the aluminium smelter at Tiwai Point on stronger metal prices, although it anticipates higher transmission costs from reopening a mothballed potline.

The local division of global mining group Rio Tinto, which owns 79 per cent of New Zealand Aluminium Smelters, said underlying earnings were $75 million in calendar 2017, up from $25m a year earlier.

That reflected higher aluminium prices, which were an average 23 per cent higher than the year earlier, and encouraged the smelter operator to reopen a fourth potline that's been cold since 2012.

Revenue rose 16 per cent to $795m, lagging behind a 28 per cent increase in the cost of raw materials and consumables used of $584.2m.

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"This is a pleasing result and has given NZAS the ability to look more confidently to a commercially sustainable future," departing NZAS chief executive Gretta Stephens said in a statement.

"Predictions are for aluminium market conditions in 2018 to be volatile and NZAS remains vulnerable to that market volatility as well as movements in the New Zealand dollar against the US dollar."

Rio Tinto has played hardball with the government over the past six years to keep the major Southland employer operating when global aluminium prices collapsed.

The mining company threatened to quit the operation when electricity supplier Meridian Energy was partially privatised and listed on the NZX, extracting a $30m sweetener to stay and new power agreements.

The smelter is the country's biggest electricity user, and fair value movements in the value of financial instruments used to manage that contract often show up in the bottom line.

NZAS reported a loss of $175.5m in calendar 2017, due to a $191.2m loss on the value of derivatives, having posted a profit of $46.7m in 2016, which included an $81.9m gain on those instruments.

The power contract derivative was valued at $198.1m as at December 31, compared to $389.1m a year earlier.

The NZAS entity is effectively a tolling operation for its owners Rio Tinto and Sumitomo Chemical, with all its $602.8m of revenue coming from related parties.

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Its wage bill rose 8.6 per cent to $79.1m, with 681 full-time equivalents at year-end, up from 670 in 2016, while injury-frequency shrank to 0.88 per 200,000 hours worked, from 1.14 in 2016.

The reopening of the mothballed potline will need more staff, and NZAS signalled it will create about 32 jobs with the added capacity lifting production by about 9.2 per cent.

The smelter operator has signed a power supply agreement for the extra production but is unhappy about an extra $6m cost being added to its transmission charge.

"We believe businesses should pay a fair price for the transmission services they receive, this is not what is happening under the current system," Stephens said.

NZAS hopes to be a beneficiary of the delayed transmission pricing methodology for the national grid.

NZAS expects it will take up to six months to get the new line operating at full capacity.