The company is also in exclusive discussions regarding the potential sale of a power station at the site.

The closing of the Lynemouth smelter, which opened in 1972, is subject to the completion of a 90-day consultation process with employee and union representatives.

Rio Tinto Alcan chief executive Jacynthe Cote said the smelter is no longer a sustainable business because its energy costs are increasing significantly, due largely to emerging legislation.

"We are hopeful that the power station can remain in operation under new ownership," Cote said.