Southland leaders vow to fight closure of Tiwai Point aluminium smelter

Thursday, 9 July 2020

Great South chief executive Graham Budd and Southland Chamber of Commerce president Neil McAra address the media after meeting with Tiwai aluminium smelter boss Stew Hamilton and Southland leaders on Thursday.

‘’We are not going to give up till the last breath has been fought on this issue.’’

Great South chief executive Graham Budd and other Southland leaders are refusing to accept the Tiwai Point aluminium smelter will close and have vowed to fight to the bitter end to avoid the loss of 2260 direct and indirect jobs.

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) near Bluff.

The decision was made following a strategic review which “showed the business is no longer viable given high energy costs and a challenging outlook for the aluminium industry”.

Aerial photo with Bluff township and Bluff Hill, back, and Tiwai Aluminium Smelter front. Bluff harbour centre and the Tiwai wharf.

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

* Alarm at small crowd for smelter meeting

* Rio Tinto 'not bluffing' about threat to shut Tiwai Point smelter

Tiwai Aluminium Smelter chief executive Stewart Hamilton said his priority was the staff affected by the closure.

Staff were notified at 8am that NZAS would start to plan the wind down of operations by the end of 2021.

The decision was not taken lightly but fundamentally the smelter was losing money, he said.

The smelter’s electricity transmission costs had risen from $40m in 2008 to $65m last year.

Great South chief executive Graham Budd, left, and Southland Chamber of Commerce president Neil McAra address the media after meeting with Tiwai Aluminium Smelter boss Stew Hamilton and Southland leaders on Thursday.

The smelter sources most of its power from Meridian’s Manapouri hydro scheme. It consumed about 13 per cent of the country’s power generation.

Budd and Southland Chamber of Commerce president Neil McAra spoke to media after Hamilton had briefed them and other Southland leaders about the closure on Thursday.

Budd said everything would be done to keep the smelter open to retain the workers jobs.

‘’We would like the Prime Minister and the Minister of Finance and others to visit us as soon as possible so we can have a good round table discussion around the implications of this decision made today.

‘’We will be saying to the Government, help us save 2260 skilled jobs in Southland.’’

The Southland leaders were disappointed in a Government press release that ‘’sort of accepts’’ the decision to close, while also asserting taxpayers had been subsidising the smelter’s electricity pricing which was ‘’blatantly untrue’’, Budd said.

The smelter had been paying negotiated market prices in terms of transmission and unit pricing all along, he said.

McAra said the ‘’message from day one’’ had been about fair power pricing and a level playing field.

‘’We want to have that discussion.’’

The smelter was Southland's biggest employer and many other companies were reliant on it for work.

‘’It’s 2000 jobs potentially and we have got a 50,000 workforce, you do the maths around how devastating that would be in terms of economic impact …’’ McAra said.

Finance Minister Grant Robertson speaks on the Tiwai Point smelter closure, which will result in the loss of thousands of jobs.

Rio Tinto says NZAS contributes about $406 million into the Southland economy, 6.5 per cent of Southland’s GDP.

Invercargill List MP Liz Craig said she had invited Prime Minister Jacinda Ardern and finance minister Grant Robertson to Invercargill to discuss how the Government might help Southland support those affected, grow local jobs and create a sustainable future for Southland’s economy.

‘’In coming days and weeks, I will be talking with others in our community, about what assistance we might request from the Government in this respect.”

Regional Economic Development Minister Shane Jones said he felt for the households in Southland reeling from the news.

He fully expected Southland voices to be raised in defence of the large Southland employer, he said.

‘’Given we are so close to an election I have no doubt these issues will loom large.

‘’But I want everyone to realise this is a decision made by the owners of Rio, it wasn’t imposed on them by the Crown, and they have been threatening to walk for a long, long time now.’’

Jones said the smelter closure announcement was a blow for Southland but it was a resilient region.

He would be in Southland next week with funding announcements for shovel ready projects.

Finance Minister Grant Robertson said the Government would work with the Southland community to support economic development in the region to help offset the loss of the smelter.

The Government would support a just transition to more job opportunities in Southland.

‘’We know the strengths of Southland and we want to build on them in areas such as agriculture, aquaculture and manufacturing.

‘’There is also an opportunity to support other energy intensive projects like green hydrogen and data centres.’’

Given the challenging economic situation caused by Covid-19 it was disappointing Rio Tinto had chosen to close the smelter given the support New Zealand has shown the company and how profitable they were globally, Robertson said.

Energy Minister Megan Woods said Rio Tinto’s decision not to extend its ‘’generous power contract’’ with Meridian would flow through to the rest of the market.

“Eventually it will free up around 13 percent of total power generated in New Zealand which will relieve some pressure to build new generation.

‘’The increased supply will also have a positive impact on prices.’’

The Government expected Rio Tinto to meet its obligations for clean-up of the site (an estimated $256 million) ‘’and do the right thing on the dross,” Woods said.

Southland's mayors were to meet in Invercargill on Thursday afternoon to further discuss the region’s response to the closure.