• Unions are seeking talks with the government over the future of 1500 jobs at a Rio Tinto refinery. (AAP)
The NT government is preparing contingency plans for Nhulunbuy should Rio Tinto announce it's closing the refinery that is sustaining the region.
26 Nov 2013 - 10:57 AM  UPDATED 26 Nov 2013 - 5:54 PM

The fate of the town of Nhulunbuy looks gloomy as Rio Tinto looks likely to announce the closure of its Northern Territory alumina refinery.

A decision could be made this week on the jobs of 1500 workers, which would shatter the community of about 4000.

The mining giant has cited deteriorating market conditions, and says plans to convert the alumina refinery to gas will not proceed.

"Despite considerable efforts to improve the refinery's performance, continuing low alumina prices, a high exchange rate and substantial after-tax losses for the refinery are key factors under consideration," Rio Tinto said in a statement on Tuesday.

The loss of mining jobs and those who service the miners would devastate the region, says Will Stubbs, spokesman for the Buku-Larrnggay Mulka Art Centre and Museum in Yirrkala, a small Aboriginal community a few kilometres east of Gove.

"It's not time to conduct a post-mortem, but time to attempt to avoid a disaster for this community," he told AAP.

"People have been leaving already because they can't handle the uncertainty."

He said residents were exhausted by the months-long vacillation about their future.

The NT government was putting in place contingency plans to bail out the township should Rio close the refinery, looking at whether airlines and supermarkets would abandon Nhulunbuy, how many schoolchildren would remain, demands on the hospital and impacts on homeowners with home loans.

NT Chief Minister Adam Giles said he was surprised and disappointed by the announcement to abandon the gas proposal.

"They've pursued gas on four occasions now, as well as coal, and each time they've been presented with a solution they've never taken up that option," he told reporters in Darwin.

His predecessor Terry Mills earlier this year cut a deal to provide Rio Tinto with 300 petajoules of cheap gas to ensure the refinery didn't fold.

But in July Mr Giles said the deal was never sealed, and instead offered up 175 petajoules of gas, with Santos and the federal government making up the shortfall.

He said there was more than enough gas to keep Gove operational should Rio decide to keep it open on a full gas option.

"This decision by Rio not to utilise any gas solution presents a serious concern about the decision that may be made in the coming days."

Mr Giles said the situation raised questions about the viability of manufacturing in Australia.

"You're seeing more and more manufacturing bases closing around Australia as a result of the high cost of doing business, the carbon tax, a high Australian dollar and the ability of countries overseas, particularly in Asia, who can refine products in a far cheaper way than the NT," he said.

The Australian Workers Union is seeking urgent action to keep the refinery open, saying there will be a flow-on effect to other jobs in the Territory.

"We must not allow this site to go under because of a failure of political imagination," national secretary Paul Howes said in a statement on Tuesday.

"The Gove alumina refinery is simply too big to fail."