National's plan to save Tiwai - Rio Tinto responds

Friday, 28 August 2020

National leader Judith Collins explains why it's important to save Tiwai in Southland.

National Party leader Judith Collins says the country is losing thousands of jobs every week due to the largest economic crisis in generations which is a reason why it will step in to save the Tiwai aluminium smelter.

Collins’ says the party will facilitate negotiations between Rio Tinto, power companies and Transpower to achieve a more cost competitive environment to keep the smelter open, if it wins the October general election.

The party recognised the need to support existing employment opportunities and protect the 2260 jobs, both at Tiwai and in the wider Southland community, from the hard close of the smelter on August 31, 2021, Collins said.

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National leader Judith Collins and senior MPs were at the Yunca Heating business in Invercargill on Friday outlining the party's plan to save the Tiwai Point Aluminium Smelter from closing.

“Our aim is to create a commercially viable outcome that would keep the smelter in operation for at least the next five years while preparing Southland to lessen the severity of the smelter’s hard-closure.’’

Rio Tinto has announced it plans to close the Tiwai Point Aluminium Smelter in August 2021.

National was concerned at the loss of major industries in what were difficult times for the world.

“The last thing we should be doing now is getting rid of jobs where people make things,’’ Collins said.

She understood the owners of the Manapouri Power Station - Meridian Energy - had offered a ‘’positive’’ electricity price to Rio Tinto, based on Meridian’s potential losses of tens of millions of dollars a year if there was a drop-dead date for closure of the smelter.

‘’Based on this, we understand that a commercial deal could be reached. That deal alone would result in a more reasonable operating environment for the smelter’s operators, but National would do more.

“A major factor is the cost of electricity carriage charged to the smelter by Transpower and National will want to see the current transmission price path negotiated to a point the smelter can commit to a future beyond the proposed hard-close date of August 31, 2021.

In exchange for this deal, National would require a plan from Rio Tinto for the clean-up of the site and dealing with the waste when it closed.

Rio Tinto’s managing director of pacific operations Kellie Parker, said the company welcomed support from all political parties to achieve a fairer transmission cost which better reflected the service it received at Tiwai.

National leader Judith Collins visited the Yunca Heating business in Invercargill on Friday where she said the party, if elected to Government, planned to save the Tiwai Point Aluminium Smelter from closing in 12 months. From left are National Party Southland electorate candidate Joseph Mooney, National Party energy spokesman Jonathan Young, Collins, National deputy leader Gerry Brownlee and National Party Invercargill electorate candidate Penny Simmonds.

Over the past decade Rio Tinto had spent nearly $4 billion in the New Zealand economy, with more than $3 billion of that going towards the electricity market.

‘’On transmission costs alone, Rio Tinto has paid $610 million over the past 10 years,’’ Parker said.

’’Now, the Government and Southland have made it clear it is their preference for the smelter to exit more slowly over a four to five year period, rather than in 12 months, however in order to achieve that Rio Tinto needs a fair and fixed cost for transmission.

‘’We want to give our people and our community certainty about their futures as soon as possible.'

Collins said she was confident the National Party could do a deal with Rio Tinto to keep the smelter open for at least another five years, saying the transmission costs were the biggest issue.

‘’The Government’s current hands-off approach falls short of what Southlanders should expect.”

Deputy leader Gerry Brownlee said Transpower was a state entity and there was an opportunity to sit around the table and work out would what was reasonable.

In 2013, the National Government gave Rio Tinto $30m to keep the smelter open, with Bill English saying at the time there would be no more help.

However, Collins said the world and the economy had changed since then.

‘’It’s not ideal having to do [these] things, but it’s also not ideal seeing 2260 people lose their jobs, particularly where there’s nothing set to replace it.’’

National had not spoken out on the issue until now because it was ‘’seeing if the government could do a deal’’.

‘’We have seen nothing from them.’’

The world was in a flux with Covid and New Zealand needed to be more protective of its economy, Collins said.

Government Finance Minister Grant Robertson said there were a range of discussions taking place around the smelter but they were commercial so he wouldn’t reveal details.

The Government has ruled out a direct subsidy to Rio Tinto and has been in talks with southern leaders on how to assist the region when the smelter closes.

Gore District Mayor Tracy Hicks said Southland needed the Government to agree to speed up the introduction of what was called the Prudent Discount Provision in the electricity pricing system.

This would allow for a fairer pricing regime for the smelter, or for the Government to help bridge the gap itself, he said.

Basil Walker, who is standing as an independent candidate in the Invercargill electorate at the October general election, has said the main issue facing the smelter was the high transmission costs it faced.

He is standing on a platform of trying to save the smelter from closing.

NZ First leader Winston Peters has also visited Invercargill this year to campaign for Tiwai. He wanted the Government to step in to ensure the smelter remained open long-term, although ruled out a Government buy-out.