The struggling Gove alumina refinery is a step closer to shutting down after owner Rio Tinto confirmed it would abandon long-running efforts to convert it to a cheaper form of energy.
Federal and territory governments have been trying to strike a deal with Rio for more than a year to bring gas to Gove and thereby reduce the operating costs of the loss-making asset.
Despite up to 10 years of gas being available, Rio confirmed on Tuesday it would not be embracing a gas conversion for the refinery, which has been losing money on the back of low alumina prices and the high Australian dollar.
"Plans to convert the alumina refinery to gas will no longer proceed, and Rio Tinto is now considering future options around the alumina refinery in the Northern Territory," the company said.
While a final decision over Gove's future is still weeks away, it appears increasingly likely that refining at the remote site will come to an end.
Gove has an important social and economic role in the Northern Territory, where it largely sustains a town of close to 4000 people, many of whom are indigenous.
Rio said it would continue mining bauxite nearby "under all scenarios", which would see the company retain a presence.
"There will be no change to refinery operations until a decision on the future of the refinery has been made. Rio Tinto will be consulting with employees and the community in the coming weeks and will advise all stakeholders about its decision at the earliest opportunity," the company said.
"The Australian and Northern Territory governments on both sides of politics have worked tirelessly with Rio Tinto over recent months endeavouring to secure a long-term future for the refinery.
"At this time, there is nothing more that could reasonably be expected to be done by either government to support the business case for gas."
Rio has spent much of the past two years trying to sell Gove and its other Australasian aluminium assets under the banner of Pacific Aluminium. But a failure to achieve a sale has seen the assets recently bought back in house.
Australian Workers Union national secretary Paul Howes described Gove as "too big to fail" and has urged federal Industry Minister Ian Macfarlane and NT Chief Minister Adam Giles to keep the refinery open.
"A solution can and must be found to keep this site open. It simply defies logic that we would allow 1500 jobs to be shed," he said.
Mr Macfarlane said the federal government had confirmed that extra gas was available to Gove, but the final decision was Rio Tinto's to make.