While talks with the New Zealand government are ongoing about addressing the smelter's high transmission costs, the power price agreement makes the smelter economically viable and competitive over the next four years.
The extension also allows time for detailed closure studies and for NZAS to support the government and Southland community in planning for the future.
Rio had flagged in summer 2020 it was planning to wind down operations by August 2021 due to high energy and transmission costs.
"Plans for eventual closure of the Tiwai Point smelter will include extensive stakeholder consultation, including within the Southland community and reflect the company's robust closure and remediation standards," the company said in a statement.
Rio Tinto holds 79.36% of the NZAS joint venture, with Sumitomo Chemical Co holding the remainder.
The plant had 1,000 staff and created a further 1600 indirect jobs in Southland, the company said.