Southlanders need to get 'more vigorous' to save smelter

Tuesday, 11 August 2020

Southlanders need to get ‘’much more vigorous’’ in supporting the Tiwai Point aluminium smelter to stay open for at least 10 more years, a former Comalco New Zealand boss says.

Comalco, whose parent company was Rio Tinto, was the original majority shareholder of the Tiwai smelter and responsible for operating it.

Kerry McDonald, Comalco New Zealand managing director from 1988 to 2003, has spoken out on the issue because he was upset the Government had stated the smelter had received subsidised power prices over the decades.

The smelter had not been subsidised, he said.

In fact, selling power to the smelter from the Manapouri hydro scheme had been one of the most profitable investments a New Zealand Government had made, he believed.

The initial power price was the actual cost of supply plus a 10 percent margin, ‘’so there was no subsidy at the outset,’’ and about five years later then Prime Minister Rob Muldoon forced a 350 per cent increase on the smelter’s electricity price, he said.

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**

McDonald acknowledged smelters didn’t last forever, but believed the Tiwai plant had at least 10 more years of production life.

The Southland public needed to show “more urgency’’ in pushing for it to stay open for longer.

‘’I think the Southland community needs to get much more vigorous in support of the smelter because it’s not subsidised, it’s very important to the economy, and I think it will be virtually impossible to replace.’’

When Muldoon was threatening a massive power price increase for the smelter then Invercargill Mayor Eve Poole sent at least one plane load of Southlanders to demonstrate outside parliament, he said.

He saw no sign of such action being taken now.

“It’s almost as if it is too difficult.’’

He acknowledged the industry was going through difficult times, but said Rio Tinto was just one of several players.

‘’The Southland community needs to put the heat on Rio as well.

‘’There’s a few players in this and if the Southland community want to maximise the chance of keeping the smelter operating for another 10 years it has to put its views forcefully.’’

Southland’s leaders have made it clear they want the smelter to remain open for at least another five years and are currently seeking a meeting with Energy Minister Megan Woods and Finance Minister Grant Robertson to push their case.

Gore District Mayor Tracy Hicks, chairman of the Southland mayoral forum which has been seeking the meeting, could not be contacted on Tuesday afternoon.

The smelter’s majority owner, Rio Tinto, announced in June that it planned to close the smelter at the end of August, 2021, after failing to reach an agreement over a desired reduction in its power bills.

In a statement to the NZX this week, Meridian Energy, the main supplier of electricity to the smelter, says it has noted media reports suggesting a further decision on the future of the smelter will be announced to its staff in the next 4-6 weeks.

‘’Meridian has no knowledge in relation to any such announcement.’’

Meridian has put a confidential proposal to New Zealand Aluminium Smelters [NZAS] with the objective of allowing NZAS to close down the smelter over a longer period of time - Meridian has proposed up to four years.

‘’To date that proposal has not been accepted and Meridian's current expectation is that the smelter will close on 31 August 2021 as previously announced by NZAS.’’