New Zealanders could see their electricity bills plunge after Rio Tinto said Wednesday it was considering closing an energy-hungry aluminium smelter, potentially leaving the country awash with excess capacity.
But the announcement spooked investors and sent shares in energy firms plummeting at the prospect of cheap electricity flooding the national grid.
Meridian Energy tumbled 8.67 percent, Mercury NZ was down 8.35 percent, Genesis Energy slipped 7.17 percent and Contact Energy was off 9.74 percent.
The NZX 50 index ended down more than two percent.
The sell-off came after Rio said it would carry out a strategic review into the future of its Tiwai Point operations -- site of the country's only aluminium smelter -- to be completed in the first quarter of next year.
"Under current market conditions and with high energy costs, we expect the short to medium outlook for the aluminium industry to be challenging and this asset to continue to be unprofitable," it said in a statement.
Rio said the review would consider all options "including curtailment and closure".
Tiwai Point employs about 1,000 people and is New Zealand's largest electricity user, accounting for about 13 percent of the country's entire output.
It has faced difficulties before and received an NZ$30 million ($20 million) government bailout in 2013 in return for Rio guaranteeing it would stay open for another four years.
Energy Minister Megan Woods ruled out a similar deal as a result of the latest review, saying the government's position was that Rio would get no more financial assistance from taxpayers.
"This review is a commercial process by a commercial operator," she said.