The aluminium smelter at Tiwai Point near Invercargill is to be sold by majority owner Rio Tinto as part of plans to boost the performance of its global operations.
More than 700 people work at the Southland smelter, which generates more than $1.5 billion in foreign exchange for New Zealand and is the single biggest user of electricity in the country.
Australian-based Rio Tinto will transfer six Australian and New Zealand businesses in its aluminium division including New Zealand Aluminium Smelters (NZAS) into a new unit called Pacific Aluminium that will be sold at some stage.
Rio Tinto says the firms are sound businesses that are well-managed, but are no longer aligned to the future direction of the company.
Chief executive Tom Albanese did not give any indication of when the assets may be sold, saying it may not occur until the economic climate improves.
Plants in France, Germany, the United States and Britain may also be sold.
Rio Tinto bought aluminium giant Alcan in 2007, but iron ore accounts for nearly 80% of its earnings.
Promotions company Venture Southland is concerned about the impact on the region if the smelter closes.
Strategic projects manager Steve Canny says the smelter produces the highest quality aluminium in the world and is confident Rio Tinto will find a buyer.
Mr Canny is unsure how much the smelter will be sold for.