NT proposes rescue plan for aluminium plant

The NT Government has proposed a plan to help save Rio Tinto's aluminium refinery near Gove, but says the resources giant must work with it on a plan to secure cheap power for the plant.

Rio Tinto has previously warned it may have to close the refinery unless it can replace the expensive diesel power supply with cheaper natural gas.

But plans to alter the plant have been complicated by the fact that the refinery is expected to use almost as much gas as the entire NT.

Yesterday the Government proposed a plan to allocate the plant 10 years of gas from the state's own  supplies, provided by energy company Eni Australia.

But the State Government said the deal would only go ahead if a replacement gas supply could be found by the end of September.

The NT Government is also asking Canberra to underwrite the financing of a gas pipeline to Gove.

In a statement NT Chief Minister Terry Mills said replacement gas could be found following further exploration by Eni, or a separate deal could also secure a different supply.

Rio has given a January 31 deadline to find a gas supply for the Gove refinery, but the Government says more time will be required.

“I now call on Rio Tinto to continue to operate the Gove Refinery while this search for a replacement gas supply occurs,” Mills said.

ABC News reports resources analyst Lew Fellowes said Rio was losing around $30 million a month on the refinery due to the high cost of power, low aluminium prices, and strengthening dollar.

Fellowes said the deal proposed by the NT Government was “too little too late” and the refinery would most likely shut down.