PERTH (miningweekly.com) - The Northern Territory government has asked mining giant Rio Tinto for more time on its review deadline for the Gove aluminium refinery, announcing that it would release a volume of gas from the Power and Water Corporation to supply the refinery.

In October of last year, Rio announced that it was undertaking a review of the Gove operations, as it was estimated to be losing some $200-million a year, in part owing to the high costs of heavy-diesel power generation.

The review, which was earmarked for completion by the end of this month, would address a variety of options, including the suspension of refinery operations until economic conditions improved.

In an effort to retain operations at Gove, the federal government in November backed the construction of a proposed gas pipeline to supply gas to the struggling operations.

Northern Territory Chief Minister Terry Mills said on Wednesday that securing the future of the Gove refinery was of upmost importance for the state.

“My government has been working around the clock with the Commonwealth government, Rio Tinto, Eni Australia and other gas suppliers over the past few months to ensure the Gove refinery remains open for business,” Mills said.

“We believe there is now a deal on the table that can provide the people of Gove with that certainty.”

Mills noted the release of a volume of gas from the Power and Water Corporation’s current contract with Eni for use at the Gove refinery, provided a replacement supply was found, had been approved at a Cabinet meeting on Wednesday.

“While Rio Tinto has set January 31 as a deadline on the future of the Gove refinery, we believe more time is needed to ensure that a replacement gas supply is found and the Northern Territory’s electricity supply is not put at risk,” Mills said.

The government was only willing to release the gas once the Commonwealth government approved the underwriting of the financing for the Gove pipeline, a replacement gas supply has been secured following Eni’s exploration of the Penguin Deep reserve and other potential prospects, or when a replacement gas supply is secured from other reserves.

“I am confident that if Rio Tinto and Eni are willing to continue to work together in good faith to reduce the risks to the Northern Territory, an aggregated gas supply solution can be found by 30 September 2013,” Mills said.

Gove produces more than 
8.2-million tons a year of bauxite, and 2.65-million tons a year of alumina, with the operation employing some 1 400 workers.