Giant miner Rio Tinto (ASX:RIO), one of the main private employers in Australia’s far north, announced Friday it would halt production of alumina at its Gove refinery, which has struggled with low prices and a high exchange rate.
The move, to begin in the first quarter of 2014, would leave about 1,100 people — equivalent to about 25% of the population of nearby town Nhulunbuy— out of work.
“Our aluminum business is facing challenging market conditions and tough decisions are needed, but those decisions are so much harder when our employees and local communities are affected as they are in Nhulunbuy,” CEO Sam Walsh said in the statement released to the Australian Securities Exchange.
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Rio Tinto had previously threatened to shut down the unprofitable refinery, but agreed in February to keep it open after securing a 10-year supply of natural gas that will substitute for costly fuel oil. The deal fell through in July and not even the intervention of both the Australian and Northern Territory governments could save the plant.
“All practical scenarios were considered in an attempt to make this work however, it has not been possible to find a sustainable solution,” said the company.
Rio’s bauxite mine in the area, which employs just about 100 people, will continue to operate.
Today’s announcement comes on the heels of Rio’s decision to ditch two coal exploration licences in Queensland, Australia.