Tiwai smelter value cut by 30%

The Tiwai Point aluminium smelter is among a group of Rio Tinto assets which has had its valuation cut by more than 30 per cent.

The Wall Street Journal reported that Deutsche Bank analysts had valued Pacific Aluminium, the business unit made up of five Australian smelters and Tiwai, at US$4.4 billion (NZ$5.3b).

Four months ago the group was valued at US around 6.5bUSD.

Rio Tinto is due to report on its finances today and analysts said it could be "an interesting write-down of its Pacific Aluminium assets".

The Journal reported that Rio Tinto did not see this as a "forced seller" of Pacific Aluminium, and there was still plenty of time for the aluminium price to recover.

Paul Young, of Deutsche Bank, assumed the Pacific Aluminium business would be divested by the first half of 2013, the Journal reported.

Last October Rio Tinto announced that 13 assets would be sold "at an appropriate point in the future".

New Zealand Aluminium Smelters was one of six that would be transferred to a new business unit first called Pacific Aluminium.

Richard Hay, Southland Chamber of Commerce chief executive, said there were several reasons why a company would write down its assets.

A pending sale would be one reason, he said, and this had been discussed when Pacific Aluminium was formed in October.

He did not think changing the value of the assets would have any reflection on the security of the Tiwai Point smelter, and on the surface, it was not likely to have any repercussions in Southland.

Tiwai Point management would not comment on the write-down of the asset yesterday, as it was a Rio Tinto decision

. Rio Tinto representatives could not be contacted yesterday.