Meridian and Rio Tinto still talking - but what does it mean?

Thursday, 16 July 2020

Minister of Energy and Resources Megan Woods and Prime Minister Jacinda Ardern speak about Tiwai Aluminium Smelter closing.

Meridian Energy has confirmed it is still in negotiations with Rio Tinto around the Tiwai Point aluminium smelter’s lifespan, while Southland’s leaders scramble to try to diversify the province’s economy before the smelter closes.

Rio Tinto announced last week that it would close its aluminium smelter near Bluff, which employs about 1000 people directly, with further 1000-plus jobs attached indirectly.

Meridian chief executive Neal Barclay said on Thursday the company was currently in discussions about a staged exit longer than the 14 months announced by Rio Tinto last week.

“However, any decision on that front is ultimately up to Rio Tinto,’’ he said.

Tiwai Point Aluminium Smelter chief executive Stewart Hamilton talks on the future of the smelter.

* PM: Government needs to support job creation and transition in Southland

* Prime Minister in Southland to front leaders on Tiwai closure

A Rio Tinto spokesperson said: “Any offer to improve the total energy cost for the smelter would be reviewed and considered in good faith by NZAS”.

Aluminium smelter general manager Stew Hamilton confirmed Rio Tinto was currently engaged with Meridian, as it was with all stakeholders.

''We have exhausted all possibilities, we think, but there's still a window available, but it's closing pretty fast.

Prime Minister Jacinda Ardern talks about the future of Southland during a stand-up in Invercargill.

''It is serious, if nothing else happens over the next period of time we will do detailed planning for winding down [in August 2021].’’

In the meantime he would ''keep fighting''.

Rio Tinto had spent months doing a strategic review and had significant engagement with stakeholders including Meridian and Transpower before making the closure announcement last week.

Hamilton said his focus, since the closure announcement, had been on supporting the staff.

Southland’s leaders asked Prime Minister Jacinda Ardern, at a breakfast in Invercargill on Thursday, to help extend the smelter’s life for at least another five years to allow for the transition of industries in Southland, such as aquaculture.

Prime Minister Jacinda Ardern speaking to media at Great South, in Invercargill, from left, Te Tai Tonga MP Rino Tirikatene, obscured, Minster of Energy and Resources Megan Woods, Prime Minister Jacinda Ardern, List MP Liz Craig, obscured, and Minister of Finance Grant Robertson.

Chamber president Neil McAra said: “We’re not asking for a 20-year plan, just five years to look at other options and ensure Southland’s economy remains buoyant.’’

McAra believed the prime minister and ministers left the meeting with a greater appreciation of the need to work towards a longer transition period than the 14 months.

Energy Minister Megan Woods also confirmed that negotiations between power supplier Meridian Energy and Rio Tinto were still ongoing.

“Look, my conversations with Meridian is they are progressing commercial discussions with the smelter to extend those time frames, but ultimately that is a commercial conversation and not something the Government is involved in,’’ Woods said.

An aerial photo with Bluff township and Bluff Hill, back, and Tiwai Aluminium Smelter front. Bluff Harbour centre and the Tiwai wharf.

Woods ruled out any Government ‘’subsidies’’ or ‘’discounts’’ to help keep the smelter open.

Whether the timeframe for the smelter closure could be extended ultimately sat with Rio Tinto, Ardern said.

The prime minister felt there had been “a bit of a difference’’ between the messages that had come from New Zealand-based company New Zealand Aluminium Smelters compared to those conversations with parent company Rio Tinto.

Ardern said the Government’s focus was on speeding up other potential growth industries for Southland, which included the likes aquaculture, hydrogen, agriculture, and data centres.

Finance Minister Grant Robertson acknowledged that many of those opportunities were still years away.

Regional Economic Development Minister Shane Jones announced on Thursday a $25m upgrade to the Homer Tunnel as part of the Government’s funding for ‘shovel-ready’ projects on Thursday.

He also announced funding for two Southland businesses, the Alliance Group and Drysdale Hydroponics.

Ardern felt that investment would create ‘’hundreds of jobs’’ in the short-term to help with the transition following the closure of the smelter.

“They are ones that we have identified that are quick turnaround projects, jobs that can come on stream in a short time frame,’’ Ardern said.

“What we are also mindful of, whatever timeframe we will be working to for the smelter, we have a particular group of high-skilled, high-wage workers. We need to identify what future industries will be able to pick up some of those skill sets.

Southland mayoral forum chairman Tracy Hicks said Southland leaders wanted the smelter to carry on for longer than 14 months.

''What that longer means is yet to be determined.''

''We need to be open for change but also be doing everything we can to maximise the industries we have which give us prosperity,'' Hicks said.

The closure announcement from Rio Tinto had come sooner than expected and the region needed time to get the other industries established.

''We need that [smelter] there, operating and viable, for quite some time.''