AUDIO: Larry Williams discusses the smelter with energy analyst Brian Leyland

New Zealand's Aluminium Smelter says it will use its one month negotiation extension with Meridian Energy to investigate cheaper arrangements.

The deal between Meridian and NZAS runs out at the beginning of 2017, but the termination point for looking for a new contract was set to run out today, it has now been extended by a month.

NZAS general manager, Gretta Stephens says Tiwai is one of the most operationally efficient smelters in the world, but pays one of the highest prices for power.

She says the combination of the high electricity costs, combined with high transmission costs and the continually low aluminium prices is putting significant pressure on the smelter.