The outback town of Nhulunbuy is celebrating after global miner Rio Tinto Ltd promised to keep open its loss-making alumina refinery.
Rio subsidiary Pacific Aluminium says it will keep open the giant Gove refinery, following a deal with the Northern Territory government to convert the diesel-fed plant to run on gas.
"Pacific Aluminium's alumina refinery in Nhulunbuy will continue operating as planning, approvals and delivery of the gas to Gove project progresses," the company said on Wednesday.
Rio Tinto has been losing about $30 million per month from its Gove operation, which includes one of the world's largest alumina refineries and a large bauxite mine.
An analyst has estimated converting the diesel-fuelled plant to run on natural gas would save Rio Tinto at least $300 million each year, although losses are expected to continue until the work is completed in about two years' time.
Dave Suter from the Nhulunbuy Chamber of Commerce and Industry said workers cheered at news the refinery would stay open.
In a briefing with the company, Mr Suter said he was assured the gas deal meant the refinery would be viable for the next 40 years.
"For the Rio people it was pretty good. It has taken a lot of stress off them," he said.
There were fears that if the refinery had closed it would have devastated Nhulunbuy, a town of about 3800 people built to service the alumina operation.
NT Chief Minister Terry Mills announced Rio Tinto's refinery decision in parliament and said some steps still needed to be taken to seal the deal.
The federal government must ensure the underwriting of a gas pipeline, commercial arrangements were needed for the gas supply, and environmental and other approvals were needed, he said.
But he later told journalists the announcement from Rio Tinto meant there would be security for "many years to come".
"We can all breathe a sigh of relief," Mr Mills said.
Klaus Helms, who heads a local Aboriginal corporation and is chairman of the East Arnhem Futures Alliance, said the decision was great news.
"The traditional owners have just got the news and they are rapt with it," Mr Helms said.
Northern Land Council chairman Wali Wunungmurra said he was also delighted.
"Many Aboriginal people in the region benefit from the services that are in Nhulunbuy purely because of the mine," Mr Wunungmurra said.
"If those hospitals, schools and shops had closed down, it would have hurt our community badly," he said in a statement.
Resources Minister Martin Ferguson is yet to guarantee his government will underwrite the cost of the 600km gas pipeline but said the commonwealth would give "detailed consideration" to facilitating the construction.