Invercargill deputy mayor Toni Biddle told Newstalk ZB this morning that it was "incredibly disappointing news" - which she learned of at the same time as the media.
Biddle said the local community had fought hard for the community and she felt let down by the Government.
"All we really wanted was a fair operating environment, so we are very disappointed, but we're also very, very resilient down here, so we will stand together as we face this announcement together, moving forward," Biddle said, expressing hope that Rio Tinto could be convinced to change its mind.
"I don't believe it's over until it's over."
In a statement, the company added that a strategic review concluded "that the smelter, which has made Rio Tinto an underlying loss of NZ$46m in 2019, is not economically viable due to energy costs that are some of the highest in the industry globally, coupled with a challenging short to medium term aluminium outlook".
NZAS is a joint venture between Rio Tinto (79.36%) and Sumitomo Chemical Company of Japan. (20.64%).
It says it employs around 1000 people directly and creates a further 1600 indirect jobs in Southland.
In October the company announced it was undertaking a strategic review, with the head of its New Zealand operations indicating it needed "tens of millions" in annual relief of both transmission costs and electricity pricing.
At the time the Government indicated that the position of the New Zealand Government was that there would be no more relief from taxpayers for the smelter.
A spokeswoman for Energy Minister Megan Woods said the minister was not immediately able to comment this morning.
The review was meant to be completed in late March, but the company has made no announcement about its future since.
Rio Tinto said that "extensive discussions with a wide range of interested parties have failed to secure a power contract that will enable the operation to become both competitive and profitable".
Over the next 14 months the owners will progressively wind-down and close the operation.
"We recognise the decision to wind-down operations at NZAS will have a significant impact on employees, the community and our customers," Rio Tinto Aluminium chief executive Alf Barrios said.
"It is not a decision we have made lightly and without significant careful consideration. It is very unfortunate we could not find a solution with our partners to secure a power price reduction aimed at making NZAS a financially viable business. We will therefore terminate the power contract and move to close the operation.
"We are committed to working with our partners as we progress through detailed planning towards closure and we will do all we can together with the government to find ways to support the Southland community."
Late in 2019 Barrios flew to New Zealand to meet with Woods and Finance Minister Grant Robertson to stress the risk that the smelter could close.
It appeared to lead to progress, with Barrios writing to the ministers the following day thanking them for an offer to help build a business case for the smelter.
Tiwai Point is the country's biggest electricity consumer and among the world's lowest-carbon producers of aluminium.
It's closure will have a major impact on the entire electricity industry, especially Meridian Energy, New Zealand's largest electricity generator, which owns the nearby Manapouri Power Station.
In a statement to the NZX, Meridian confirmed that Rio Tinto had informed it that it was planning to leave New Zealand next year.
"Meridian is reviewing this decision and will engage with Rio Tinto to assist the smelter owners in an orderly exit from New Zealand."
Rio Tinto reported a $46.2 million underlying loss from its New Zealand aluminium smelting interests in 2019 - despite near-record production.
The company owns 79.4 per cent of the Tiwai Point aluminium smelter, which produced 353,293 tonnes of saleable metal last year, the most since 2011.
But lower aluminium prices and higher energy, labour and raw material costs saw underlying earnings at Rio's Pacific Aluminium NZ business drop $67.8m from the year before.
- More to come