No Tiwai Point aluminium smelter decision before election, Rio Tinto indicates

Wednesday, 23 September 2020

Rio Tinto, owners of the Tiwai Point aluminium smelter near Bluff, announced in July it would close the plant at the end of August 2021. Efforts are being made to keep it open for longer.

Rio Tinto has indicated no decision will be made on the future of the Tiwai Point aluminium smelter before the October general election.

And it is blaming the Government.

Rio Tinto, majority owner of the smelter near Bluff, has previously announced it will close the plant at the end of August, 2021.

Rio Tinto’s managing director of pacific operations Kellie Parker said both the Government and the Southland community had since told the company they would prefer a longer exit period.

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For that to happen, Rio Tinto needed a fixed and fair price for transmission, Parker said.

“Despite our strong desire to provide certainty for our people and our community, as soon as possible, the Government has told us that no decisions will be made before the election.”

Energy Minister Megan Woods said a range of discussions were taking place but they were commercial in nature so she would not be going into any detail about them.

Gore District Mayor Tracy Hicks, the Southland mayoral forum chairman, has previously said the nub of the smelter issue was the high transmission costs faced by Rio Tinto.

Hicks said the Government needed to speed up the introduction of a provision in the electricity pricing system which would allow a fairer power pricing regime for the smelter.

Meanwhile, Meridian Energy, the major power supplier to the smelter, said it had made a further offer to Rio Tinto in a bid to keep the plant open beyond next year.

When Rio Tinto announced in 2019 it would be undertaking the strategic review of the smelter’s future, Meridian put together a package of contractual amendments that would have delivered a significant reduction [more than $60 million] in the cost of energy to the smelter, the Meridian spokesperson said.

As part of the package Meridian asked the smelter owners to commit to New Zealand for at least four years.

Rio Tinto did not accept that offer and announced in July it would be exiting New Zealand on 31 August 2021, the Meridian spokesperson said.

‘’Since the announcement by Rio Tinto of their intention to exit New Zealand, Meridian has tabled a further offer to support them to extend the exit period to four years.

‘’To date that further offer has not been accepted.’’

Meridian would not reveal details of the second offer, or when it was tabled, saying the information was commercially sensitive and confidential.

Hicks said he was aware discussions had been ongoing between Meridian and Rio Tinto so was not surprised a second offer had been made.

Rio Tinto announced in July it would close the smelter, saying the business was no longer viable given high energy costs and a challenging outlook for the aluminium industry.

Since then, Southland leaders, including Hicks, have been lobbying the Government to step in so the smelter can stay open for at least five more years.

On Tuesday, Hicks said the looming general election had brought the smelter issue into focus for all political parties, given up to 2600 jobs could be lost in Southland.

‘’I am hopeful there will be a positive outcome for Southland, whether that comes before or after the election, I don’t know.’’

Hicks and Southland leaders had been speaking with Government ministers and Rio Tinto in a bid to keep the smelter open for longer.

“I want the best for Southland and the discussions I have had with all the parties to date indicate they want the best for Southland as well,’’ Hicks said.