Mining giant Rio Tinto says it has abandoned plans to convert its Gove alumina refinery to gas and is reviewing its future operation of the plant.

In a statement, Rio said “deteriorating market conditions” were amplifying the challenges of the current operating environment.

It said that despite efforts to improve the refinery’s performance, continuing low alumina prices, a high exchange rate and substantial after-tax losses were key factors under consideration.

“Rio Tinto has informed the Northern Territory Government and the Australian Government that no final decisions have been made,” the statement said.

“Under all scenarios, bauxite mining operations are planned to continue.

“There will be no change to refinery operations until a decision on the future of the refinery has been made.

“Rio Tinto will be consulting with employees and the community in the coming weeks and will advise all stakeholders about its decision at the earliest opportunity.”

The Gove refinery is serviced by the town of Nhulunbuy and most of its population of about 4,000 people are linked to the operation of the mine and refinery.

Rio Tinto acknowledged the efforts of the Territory and Commonwealth governments to secure a long-term future for the refinery by converting it from expensive liquid fuel operation to gas.

The Northern Territory government says it has been working on contingencies for the economic future of the Gove Peninsula if Rio Tinto closes its alumina refinery.

Chief Minister Adam Giles says Rio Tinto gave a confidential briefing to the Territory cabinet yesterday and the company is expected to make an announcement about the future of the refinery this week.

Repeating a statement he made in September, Mr Giles said the Government had done all it could to supply gas to make the operation commercially viable.

However, he says the refinery has been losing money for years.

“We have, for a long period of time, had a plan in place should the negative decision be made,” he said.