Rio Tinto writes off $592 million aluminium smelter

Rio Tinto Ltd. has written $592.1 million off its Tiwai Point aluminium smelter in New Zealand, slashing its value to just $14.8 million.

The smelter's future is under cloud as Rio seeks to sell it as part of a clutch of ageing Australasian aluminium production assets, packaged for sale as Pacific Aluminium.

The writedown comes after Rio reduced the carrying values of a number of its global aluminium assets in its 2012 results on deteriorating conditions in global aluminium markets.

Rio made the drastic writedown in February but it has only just emerged in financial accounts filed with the New Zealand Companies Office.

The records also show the miner's subsidiary, Rio Tinto Alcan NZ, which owns 79 per cent of Tiwai Point, reported a loss of $677.9 million for the year to December.

Excluding the writedown, the group made an operating, pre-tax loss of $91.5 million.

No buyers have emerged for Rio's aluminium asssets but the miner is believed to be considering an issue of Pacific Aluminium shares to its existing shareholders to quit the assets.

The Tiwai Point writedown followed Rio Tinto's decision to reduce the carrying values of a number of its global aluminium assets in its 2012 results, due to the deteriorating conditions in global aluminium markets, it said.

A 16 per cent decline in the price of aluminium in 2012 and the strong local current contributed to an 18 per cent reduction in consolidated revenues.

Production was also reduced due to high spot electricity prices in the year.

Rio Tinto Alcan NZ has also been trying to renegotiate its long-term electricity contracts with state-owned Meridian Energy.

The value of the writedown is line with market opinion that site remediation costs of around $400m would accrue to Rio if the smelter were to be closed.