The woman behind the 'Fight for Fairness' campaign Carla Forbes of Market South is "utterly gutted" and "heartbroken" at the news Rio Tinto has announced it will close its aluminium smelter at Tiwai Point, potentially affecting 2600 jobs.

Forbes launched the campaign last year in a bid to get a fair power price for the smelter, "not a handout," to prevent it from closing down and taking with it a significant chunk of Southland's - and the country's - economy.

The smelter currently uses 13% of New Zealand's power supply, employs around 1000 people directly and a creates a further 1600 jobs indirectly. 

In a statement today, Rio Tinto said the New Zealand Aluminium Smelter (NZAS) made Rio Tinto an underlying loss of NZ$46 million in 2019 and is not economically viable due to energy costs that are some of the highest in the industry globally, coupled with a challenging short to medium term aluminium outlook. 

"Extensive discussions with a wide range of interested parties have failed to secure a power contract that will enable the operation to become both competitive and profitable,'' the statement said. 

The Government today said it was disappointing that Rio Tinto had decided to close but unfortunately the decision had been "on the cards for some time now," and it was not prepared to keep on giving it bailouts. 

“Since the smelter opened taxpayers have been subsidising Rio Tinto to keep it open, either directly or indirectly through cheaper power, and Emissions Trading Scheme allocations of over $48 million per year. The company has made the decision not to keep operating without further subsidies," Finance Minister Grant Robertson said.

Mr Robertson also criticised Rio Tinto for closing the smelter in such a challenging economic climate caused by COVID-19.

However, Forbes said the portrayal of NZAS as a money-hungry corporate giant by the government was far from the truth and criticised the Government for stating that Rio Tinto had a real choice in the matter.

"NZAS pay some of the highest energy prices of any smelter in the world, the Government has a huge influence [over] those prices and they remain silent. 

She said the power prices were unfair and "exorbitant" and it was simply an unfair and uncompetitive environment for NZAS to operate in. 

"Despite [NZAS's] aluminium being [some of the] the purest in the world, they’ve been demonised," she said.

"The Chamber [of Commerce] civic leaders and our community have been lobbying government for what seems like forever...They had an opportunity to influence the right decision to be made, and they didn’t."

Ms Forbes said the income the Government, New Zealand and the Southland region made from the smelter was extraordinary, and the social impact it had on our region was immense.

"We are looking to create jobs [right now], an easy option would be to keep them [NZAS]," she said. 

Greenpeace New Zealand executive director Russel Norman said the Tiwai smelter closure would release a huge amount of low-carbon and affordable power back onto the grid.

"The Tiwai closure will mean cheaper power for New Zealand households. It also means there is more clean, renewable energy that can be used to power our cars and industries as we move to a zero-carbon economy," he said. 

However, Ms Forbes said it was not as black and white as that.

The hydro power station at Manapouri was built specifically to power NZAS and feeds power to it through a direct line. It was not set up properly to distribute power through a domestic grid network, she said.

"There’s currently no infrastructure for that power to be redeployed – Manapouri was built for Tiwai and there’s only that one line. I don’t think it will be cheaper for consumers. That transmission cost that’s currently being met by Tiwai will have to redistributed among consumers and there will need to be a lot of money spent to upgrade the systems to have the power sent elsewhere – and that’s ultimately out of the taxpayer’s pocket," she said.

Ms Forbes also said the smelter production was done much more cleanly in New Zealand and now would likely go offshore and be coal fired. This “would be huge backward step for the environment because of the increased carbon emissions,” she said.