New Zealand Aluminium Smelter at Tiwai Point reports loss, write-down, but rebound on cards

Monday, 31 May 2021

New Zealand Aluminium Smelter chief executive Stewart Hamilton wants Tiwai to scale back up to work at capacity for the next four years. [File video]

The New Zealand Aluminium Smelter (NZAS) has posted a loss and a large write-down of its assets, but aluminium prices are rebounding.

Pacific Aluminium New Zealand reported a net loss after tax of $100 million at the Tiwai Point smelter, and an asset write-down of $223m, at the end of its financial year in December 2020.

NZAS chief executive Stew Hamilton said the result reflected the “challenging market environment” of 2020.

“In 2021 we have seen an improved aluminium market and in conjunction with the new electricity agreement for the smelter, announced in January 2021, this enables a sustainable extension of operations at Tiwai Point.”

* Southlanders need to get 'more vigorous' to save smelter

New Zealand Aluminium Smelter chief executive Stew Hamilton says its results reflect a challenging year.

* Tiwai Point aluminium smelter to close, 1000 jobs to go

* Rio Tinto says 'nonsense' in electricity code a barrier to saving Tiwai Point smelter

A review of Tiwai point’s operations hung over the smelter for much of last year.

As the country went into lockdown NZAS closed down potline four, a production line for the conversion of alumina into aluminium, and threatened to shut down all of its operations by August 2021 after a strategic review raised concerns about high energy and transmission costs.

NZAS and Meridian Energy came to an agreement on power prices in January, which will last till the end of 2024.

Last month Tiwai Point agreed to cut back its energy usage by 11MW, owing to a power crisis brought on by a mixture of low rainfall and gas production problems.

Enerlytica head of research John Kidd said the $100m loss was “old news” because global aluminium markets had staged a dramatic comeback during the opening months of this year.

Aluminium prices rose to US$2565 per tonne in May, a level not seen since July 2011.

Several smelters and power plants in China have been shut down or relocated as part of a drive to meet energy consumption targets.

Reuters reported aluminium and zinc smelters have been shut down in the Chinese province of Yunnan. A late start to the rainy season there led to lower than expected levels of hydroelectricity being generated.

“With its new power price agreement kicking in from January it will now be extremely profitable,” Kidd said.

Pacific Aluminium is a joint venture between the Anglo-Australian multinational Rio Tinto who own 79.36 per cent of NZAS, and the Tokyo-based Sumitomo Chemical Company who own 20.64 per cent.