PERTH (miningweekly.com) - Mining giant Rio Tinto on Wednesday calmed Northern Territory fears by announcing that its Gove alumina refinery would continue operations.

Rio said its decision to keep the Gove operation running was as a result of the state government’s commitment to release a portion of its contracted gas for on-sale to the Gove refinery.

Earlier this week, Chief Minister Terry Mills agreed to release enough gas to keep the refinery open for the next ten years.

Rio’s new CEO Sam Walsh said the mining giant and Pacific Aluminium acknowledged the leadership and commitment from Mills and his Cabinet to get gas to Gove and keep the refinery operating.

“We recognise that the Chief Minister needed to follow a rigorous process to consider the short and long-term issues for the Territory. We appreciate that an outcome balancing the needs of all stakeholders has been reached. It has been a complex issue to resolve but everyone involved has worked tirelessly to find a solution.”

Walsh noted that gas supply to Gove was not only important for the refinery and the community of Nhulunbuy, but also for the entire Northern Territory.

“This project will double the size of the domestic gas market, drive further investment in gas exploration, increase long-term gas supply, attract new industries and create jobs for Territorians.”

Meanwhile, Pacific Aluminium was advancing plans for conversion from heavy fuel oil to gas, but noted that there were still a number of important steps remaining to deliver gas to Gove.

As a result of the rising cost of heavy fuel oil, coupled with a high exchange rate and low alumina price, the refinery had sustained heavy losses for some time. Converting the refinery to competitively priced gas is needed to secure its long-term viability.

The company said it would work closely with the Northern Territory government to put all final agreements and approvals in place to secure the gas supply, while also progressing its commercial discussions with gas suppliers.

Pacific Aluminium CEO Sandeep Biswas said there was still a great deal of work needed to deliver gas to Gove.

“Our next steps include finalising commercial arrangements for gas supply, securing gas pipeline financing support with the Federal government, obtaining environmental and land access approvals, and developing detailed refinery conversion plans.”