No subsidies for Tiwai Point smelter, finance minister confirms

Monday, 24 August 2020

Finance Minister Grant Robertson spoke to Southland business leaders about the future of the Tiwai aluminium smelter at a breakfast event in Invercargill in August 2020.

Finance Minister Grant Robertson believes Rio Tinto’s exit from Southland needs to be managed, but he has confirmed the Government won’t consider direct subsidies for the Tiwai Point Aluminium Smelter.

The issue of New Zealand Aliminium Smelter’s closure next year was at the forefront of Robertson’s meeting with Southland business leaders on Monday morning.

“We are continuing to work constructively with Rio Tinto,” he said, but added “you want to expand the base of industry, regardless of what happens with Tiwai.”

Roberston was due to meet with Southland mayors after the business breakfast to discuss possibilities for extending the smelter's life; to give the region enough time to establish alternative employment options.

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The smelter's high energy costs have been in the spotlight since Rio Tinto first announced it was reviewing the feasibility of its Bluff operation last year.

Negotiations between Meridian Energy and Rio Tinto were ongoing, in the hopes of buying time for a staged exit.

While he agreed transmission pricing may be a problem, Robertson warned a reduction in prices for the smelter would see someone else, possibly consumers, paying more.

Minister of Finance Grant Robertson was seated opposite New Zealand Aluminium Smelter chief executive Stew Hamilton at a business breakfast in Invercargill on Monday.

“If you squeeze something in one place, it’ll pop out somewhere else,” he said.

The Government would be looking at the other costs associated with the smelter to find alternative ways to offer support, Robertson said.

Otago Southland Employers’ Association chief executive Virginia Nicholls was disappointed that negations around the future of the smelter had not yet delivered answers.

“We know that unless a new supply agreement with a realistic electricity price is negotiated in the next few weeks, the smelter will close in August 2021,” she said.

The Association received a call from the minister’s office last week, asking it to arrange the meeting, Nicholls said.

An invitation was sent to the Southland business community, she said, but smelter staff made up the majority of attendees.

Robertson used his time to discuss New Zealand’s economy pre- and post the Covid-19 lockdowns, while also sharing recovery plans for the future.

Responding to questions from the audience, he said the framework of the Resource Management Act was being reworked to cover ocean farming – which it doesn’t currently account for.

Aquaculture has been touted as a potential growth industry for Southland, capable of absorbing workers from the smelter.

The Provincial Growth Fund awarded the region’s aquaculture industry a loan of $8 million in July, for the development of a salmon hatchery.

Aquaculture presented a growth opportunity for all of New Zealand, Robertson said.

Nicholls said she was pleased by Robertson’s comments about the Resource Management Act, but was disappointed that the minister didn’t mention plans for the return of international students.

Tertiary providers, like the Southern Institute of Technology, had been struggling since New Zealand closed its borders, she said, and the Government needed a plan to allow students to return.

“Southland can do with that right now,” she said.

“It’s built a huge amount on these international students.”