Judith Collins says Tiwai deal possible with lower electricity price

Friday, 28 August 2020

National leader Judith Collins thinks she can keep the Tiwai Point electricity smelter open for longer.

Collins has gone to Southland to promise that she will attempt to broker a deal to keep the smelter open, , should she win the election.

The smelter’s owners, Rio Tinto announced in June that it planned to close the smelter by August next year, with the loss of jobs for 1000 staff and contractors.

Collins said she believed that a deal could be reached. She noted that closing the smelter would represent a significant loss to Meridian Energy, who supplies its electricity from nearby Manapouri Power Station.

This fact alone gives Meridian a significant incentive to offer the smelter a better deal on its electricity.

“It is our understanding that the owners of the Manapouri Power Station – Meridian Energy – have offered a positive electricity price to Rio Tinto, based on Meridian’s potential losses of tens of millions of dollars a year if there is a drop-dead date for closure of the smelter.

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**

“Based on this, we understand that a commercial deal could be reached,” Collins said.

She said she’d also open negotiations with Transpower to try to work out a more agreeable pathway for the higher transmission costs which are in the process of being rolled out.

“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 31st August 2021,” Collins said.

Even with significant concessions, the smelter is likely to close thanks to changes in the global aluminium market, which make Tiwai uneconomical. National says it wants the smelter to stay open for another five years.

“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,” Collins said.

National is also pledging to make Transpower invest in new transmission lines to ensure that when the smelter closes, the electricity generated at Manapouri can be made available to the wider economy.

“Technology upgrades to the smelter could see up to 200MW of electricity available to the grid as dry-year cover. We will look to partner with Rio Tinto on the installation of those upgrades,

“National will accelerate Transpower’s investment into transmission lines upgrades to ensure Manapouri power station is not left stranded in the future, allowing the electricity to be available to the wider economy,” Collins said.

Collins said any deal would also involve an agreement by Rio Tinto to clean up the site and any other environmental waste when the smelter closes.

National isn’t the only party talking-up the possibility of the smelter staying open.

Meridian chief executive Neal Barclay said on Wednesday that it believed Rio Tinto was having further discussions with the Government over its electricity transmission bills, which are charged by Transpower.

Its Brisbane-based managing director of pacific operations Kellie Parker responded to Barclay’s comments by saying the company “continues to ask the New Zealand government for a fair price on transmission which reflects the actual service we receive at Tiwai”.

Energy Minister Megan Woods confirmed on Thursday that there were “a range of discussions taking place, but they are all commercial in nature, so I won’t be going into any detail about them”.