WELLINGTON, New Zealand--The New Zealand government has promised economic support for the Southland region after Rio Tinto Ltd. said it will close the country's only aluminum smelter by August next year.

Rio Tinto's decision was disappointing but there was a "degree of inevitability" to it, Finance Minister Grant Robertson said Thursday. The smelter supports about 2,600 jobs.

New Zealand had subsidized the smelter since it opened in 1971 and Rio Tinto had decided it couldn't continue operating it without additional support, Mr. Robertson said.

"This day has unfortunately been on the cards for some time now," he said. "The government will work with the local community to support economic development in the region to help offset this loss."

Energy Minister Megan Woods said the closure of the smelter, which uses 13% of power generated in New Zealand, will relieve some pressure to build new generation.

The electricity supply freed up by the closure will also lower prices for consumers, she said.

Write to Stephen Wright at stephen.wright@wsj.com

(END) Dow Jones Newswires

July 08, 2020 19:27 ET (23:27 GMT)

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