Unless the Government acted, there was a good chance the smelter would close. The closure would devastate the Invercargill economy, he said.
Smelter owner New Zealand Aluminium Smelters (NZAS) said it was bringing forward its existing plans to resize its business because of increasingly difficult economic conditions.
A year ago, the smelter announced plans to reduce staff numbers by more than 100 over a five-year period through natural attrition. So far, 35 of the 100 jobs had gone. About 800 people are employed by the smelter.
"Due to deteriorating economic conditions, the smelter will now complete the organisational restructure by the end of November," NZAS general manager Ryan Cavanagh said.
Australian minerals company Rio Tinto owns 79.4% of the smelter, which is one of 13 older plants the company is seeking to sell from its global portfolio. It is one of several placed under the banner of a new subsidiary, Pacific Aluminium, which includes Australian assets.
As the consumer of about one-seventh of all electricity generated in New Zealand, NZAS also wants to renegotiate the terms of a 27-year electricity contract with Meridian Energy.
The smelter, which has been operating since 1971, made losses in the past two financial years. Company records show other Rio Tinto subsidiaries in New Zealand, allied to the smelter, appeared to be profitable.
Mr Clarence said the Government needed to sit down with NZAS and Meridian and work out a deal that ensured the future for the smelter and Invercargill.
About 1000 people rallied in the streets of Greymouth on Tuesday calling for the Government to save Solid Energy's Spring Creek mine and ensure the future of their town.
"The Government has said it won't get involved in the future of Tiwai but, frankly, that's not good enough. It's sitting on its hands over Spring Creek and it's doing the same here while communities are being torn apart and our skilled workers and their families are being forced to pack up and leave for Australia," Mr Clarence said.
Mr Cavanagh said the decision to bring forward plans to reduce the size of the organisation had not been taken lightly. Affected employees were being provided with appropriate support.
The smelter would work to redeploy employees to vacant roles with NZAS and also support employees to explore redeployment opportunities within Pacific Aluminium and Rio Tinto.
"NZAS is facing tough economic headwinds. Therefore, it is imperative that we take urgent action right across our business to make the smelter resilient in any market conditions," he said.
At a glance
• NZAS is New Zealand's only aluminium smelter.
• Annual production in 2011: 354,000 tonnes.
• NZAS contributes $525 million to the Southland economy annually and supports more than 3200 direct and indirect jobs in Southland.
• In 2011, NZAS made $391 million in payments to New Zealand suppliers, including $51 million to suppliers in Southland.
