Despite a $30 million government handout to Tiwai Point
aluminium smelter owner Rio Tinto during the past year, the
plant's full-year result again plunged into the red.
The future of the ageing plant, and its 3200 direct and
indirect Southland jobs, remains under a cloud, with New
Zealand Aluminium Smelters (NZAS) chief executive Gretta
Stephens saying ''unfavourable economic conditions continue
to put considerable pressure on the smelter''.
''We're doing everything in our control to improve our
ongoing commercial position. In 2013 alone we managed to save
$28 million through continuous improvement initiatives,'' she
The smelter, which could exit Tiwai from 2017, still faces
significant challenges from the high cost of delivered power,
weak global aluminium prices and the strong New Zealand
dollar, she said.
Rio Tinto Alcan (New Zealand) Ltd released its year to
December results yesterday, reporting an $18 million loss,
compared with its $49 million loss a year ago.
''As in 2012, the underlying results of the group are a loss,
despite the renegotiation of NZAS' power contract with
Meridian Energy Ltd and the $30 million payment from the
Government in recognition of the smelter's importance to the
stability of the New Zealand electricity market,'' she said.
During renegotiation of electricity supply contracts with
Meridian Energy last year, and with the 43-year-old plant's
future in jeopardy, the Government paid Rio Tinto $30 million
Ms Stephens said the net underlying loss of $18 million was
reached after adjustments totalling $85 million were deducted
from the statutory profit of $67 million.
''These adjustments are related to the non-cash changes in
the fair value of financial instruments associated with the
power contract with Meridian Energy,'' Ms Stephens said.
It was understood the adjustment is a non-cash accounting
figure, where the movement in the underlying financial
instrument, being the actual electricity price, has moved
negatively against NZAS.
The Tiwai Point smelter was part of a group of Rio Tinto
Australasian aluminium assets unsuccessfully put up for sale
three years ago, but the group has since been reintegrated
back into Rio Tinto Alcan.
NZAS is to appeal a recent Employment Court decision, ruling
it must pay $19 million to workers, shortchanged over lieu
day entitlements going back 23 years.