PERTH (miningweekly.com) - Northern Territory Chief Minister Terry Mills has given mining major Rio Tinto incentive to continue operating its embattled Gove alumina refinery, by agreeing to release enough gas to keep the refinery open for the next ten years.

Mills said on Tuesday that the ten-year gas supply was subject to a commitment from Rio that it would keep Gove operational, and gas supplier Eni confirming the details of its guarantee to supply gas to the Power and Water Corporation (PWC) until 2026.

In October 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 evaluate a variety of options, including the suspension of refinery operations until economic conditions improved.

Mills said this week that his government would direct PWC to release the agreed amount of gas to Rio and create certainty for the Nhulunbuy community.

“Following recent meetings with international energy companies and federal colleagues, I am now confident I have reduced the risks associated with the supply of gas to the Gove refinery,” he said.

“The release of the Northern Territory’s gas supply to the Gove refinery has been met by support from the commonwealth government and the federal coalition, as well as a realisation that there needs to be a greater focus on domestic energy supply across Australia.”

Mills noted that the commonwealth government had showed its commitment to the Northern Territory government’s decision by announcing last week they would underwrite the financing of a gas pipeline to Gove.

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.

Additionally, a memorandum of understanding was developed between the Northern Territory government and the commonwealth government, which sought to increase energy security and economic development by encouraging onshore and offshore gas exploration and development, the Chief Minister said.

“During my talks, I also highlighted the need to plan for the long-term energy needs of the Northern Territory and Australia by establishing a national pipeline grid, connecting energy supplies from the Territory to the eastern seaboard and the existing national pipeline grid.”