Invercargill Mayor Tim Shadbolt 'absolutely shattered' by news of Tiwai Aluminium Smelter closure

Thursday, 9 July 2020

Invercargill Mayor Sir Tim Shadbolt talks about the closure of the Tiwai Point aluminium smelter.

Invercargill Mayor Sir Tim Shadbolt has expressed his devastation for the community after the announcement the Tiwai Aluminium Smelter will close next year.

Shadbolt said he was shattered by the news of the closure. ''Just absolutely shattered.'

''Not just because of the jobs, that's the worst scenario, but it's the families, schools and small businesses that are dependent on the smelter.”

Rio Tinto said in an announcement on Thursday it would start planning for the wind-down of operations, and the eventual closure, of New Zealand Aluminium Smelters (NZAS) following a strategic review which “showed the business is no longer viable given high energy costs and a challenging outlook for the aluminium industry”.

Invercargill Mayor Sir Tim Shadbolt at the opening of the Taha Dross Processing plant at Tiwai in 2011.

The Tiwai Aluminium Smelter is expected to be closed by August 2021.

* Coronavirus: Tiwai Point aluminium smelter exempted from lockdown

* Can Southland's economy cope if the smelter doors are shut?

The closure would result in the direct loss of 1000 jobs, with 1600 jobs indirectly connected to the smelter also under threat, the company said.

It was believed some staff were made aware of the announcement via a text message this morning.

Rio Tinto has announced it has started planning for the wind-down of operations and the eventual closure of the Tiwai Point aluminum smelter.

It was understood business and community leaders were meeting on Thursday morning to discuss the closure.

Shadbolt said when the strategic review was announced there was a thought it was part of the “argy-bargy” of negotiations.

''But this looks like it's the real thing.''

When asked about the future of the multi-million dollar Invercargill CBD redevelopment, he said: ''I imagine we will be looking at everything in a new context now.

''It could have a major impact on that and the museum.''

However, he said the electricity used by the smelter would still be available and alternative uses would be looked at.

The man behind Invercargill’s major CBD re-development, Scott O’Donnell, said it was too early to be commenting on what it would mean for the city-block development.

O’Donnell still held out hope an agreement could be met from all parties to keep the smelter open.

“I think the smelter guys have made the announcement which they had to do and it now absolutely triggers the power companies and central Government to get in the room and try to find a solution.

“Because we’ve got Government doing a huge amount of support with everything else, why should’dn’t they be supporting that.

“All [NZIS] is wanting is a market deal compared to other international industries.’’

As well as being a director of Invercargill Central Ltd, the city block developers, O’Donnell is also the acting chief executive for the HWR Richardson Group, another major Southland employer.

O’Donnell acknowledged the closure of Tiwai would impact its business.

“Yep, they are a major customer of ours. It will leave a hole in a certain business,’’ O’Donnell said.

Labour list MP Liz Craig, who is based in Invercargill also said she was devastated by the closure news and said her thoughts were with the workers, families, and businesses affected.

Craig acknowledged it will have a huge impact on the Southland economy.

She spoke with prime minister Jacinda Ardern this morning about the impact this will have on Southland.

Prime Minister Jacinda Ardern at the official re-opening of pot line 4 at Tiwai Point Aluminium smelter in December, 2018.

“I am pleased that [Finance Minister] Grant Robertson has already signalled the Government will support the Southland community in our transition, in areas such as agriculture, aquaculture and manufacturing.’’

Craig has invited Adern and Robertson to visit in Invercargill to discuss how the Government might help support those affected, grow local jobs, and create a sustainable Southland economy.

Invercargill deputy mayor Toni Biddle said the announcement was not a great surprise, as it was known closure was possible.

But it was still very disappointing.

''It's been such a huge economic footprint in our community for decades … we have to now think ahead and solve the problem, we have got 12 months,'' Biddle said.

The councils, businesses and communities in the south would have to work together and look at a new future.

''We have to put some pressure on the other projects such as aquaculture to move forward,'' she said.

Biddle said her sister worked at the smelter.

''I can imagine they are all devastated.''

Southland Chamber of Commerce president Neil McAra said the closure announcement was devastating news for the province.

''They directly and indirectly employ 2000 people and it's not good news.''

Gore District Mayor Tracy Hicks said ripples from the economic impact of the closer of Tiwai would extend throughout Southland.

While he acknowledged it was Invercargill which recorded the majority of the economic benefit of the smelter Hicks said it was a blow for the entire province.

He was not surprised the smelter was closing but was surprised by the timing of it.

The key task for Southland's leaders was to search for opportunities to fill the economic hole that would be left from Tiwai's smelter, Hicks said.

He said Great South, the Mayoral Forum, and a number of private companies had already been looking at opportunities to try to diversify Southland's economy.

Aquaculture was one industry that has been looked at.

Although Hicks agreed the share number of jobs that would need to be filled following the smelter closer was large.

'It's a huge hole, it's a good third of Southland's economy, so it's not something that is going to be replicated overnight. There's a lot of workers and families of workers that will be affected by this change,'' Hicks said.

Invercargill MP Sarah Dowie said her heart went out to the 2500 workers directly and indirectly affected by the closure.

The region was now in a precarious position on the back of the Covid-19 pandemic, she said.

''Things were already tenuous and now we have got Rio Tinto exiting Southland.

''And it's a real shame because clean aluminium should be seen as a real jewel in New Zealand's crown.’'

The smelter was ''just asking for fairness'' in respect to energy costs and transmission, she added.

The bridge leading to the Tiwai point Aluminium Smelter, near Invercargill. Power pylons run alongside the bridge, supplying Tiwai with electricity.

''The odds have been stacked against them from the beginning.''

She urged the Government to look at policies that ''enabled'' Southlanders, saying policies such as the merger of the polytechnics worked against the region.

She urged the Government to initiate regulatory reform to help the plans for aquaculture in Southland to get across the line.

The Invercargill CBD redevelopment may absorb some of the lost jobs, Dowie indicated.

''This [Tiwai closure] is a significant number of jobs and livelihoods that will be affected in the Southland community and there will be ripple effects throughout our wider community as Tiwai exits.''

A 25 per cent slump in aluminium prices over the last 18 months, increasing power costs, and over-capacity had affected the smelter. In February, it posted a $46 million loss due to volatile prices and power costs.

The smelter's electricity transmission costs had risen from $40m in 2008 to $65m last year, NZAS chief executive Stewart Hamilton said.