Smelter future in political spotlight

The Tiwai Point aluminium smelter. PHOTO: STEPHEN JAQUIERY
The Tiwai Point aluminium smelter. PHOTO: STEPHEN JAQUIERY
Southlanders keen to see the Tiwai Point aluminium smelter continue may have been buoyed by the increased interest in the issue during the election campaign.

It now seems Labour and National have found a new enthusiasm for keeping it open, in the meantime at least.

In July, Rio Tinto announced it will close the smelter at the end of August next year, a move expected to affect around 2600 workers, inside and outside the plant.

New Zealand First was first out of the blocks on promises for the smelter, but If recent political polls are anything to go by, it is unlikely to be in a position to push through its plan for a future government to either buy the smelter or offer it a better deal on power.

This week Labour promised it would keep the smelter going for another three to five years while it worked to move the Southland economy to create greener jobs.

It says it is prepared to negotiate cheaper power prices for Rio Tinto but the company will need to maintain current employment at the smelter and agree to work on remediation and with the Government over the future use of the plant.

National leader Judith Collins was quick to claim Labour was stealing its thunder, as did New Zealand First leader Winston Peters.

National's plan is to keep the plant going and upgrade its technology which it says could provide up to 200 megawatts of electricity available to the grid as cover in dry years.

This is a change of heart by National. At the time of Rio Tinto's threat to pull out in 2013, the then National-led government stumped up $30 million to secure the smelter's immediate future. Then-finance minister Bill English warned Rio Tinto not to come back for any government help, saying they certainly would not get another bite of the cherry from that government.

The deal was described as a one-off payment.

The rationale for it was to support the workers and avoid uncertainty for the electricity market if the deal did not go ahead. The company only committed to stay until January 2017, according to news reports at the time.

Both major parties are concerned about the impact of an August 31 exit on the nation's electricity market, with Labour suggesting Aucklanders would pay an extra $10 million to $16 million in power prices if the closure went ahead then.

Rio Tinto has been concerned it pays too much towards transmission infrastructure in the rest of the country when it gets most of its electricity from Manapouri.

Whoever gets the task of trying to put promises into practice after the election will not be expecting an easy ride.

Rio Tinto has said the business was no longer viable given both the high energy costs and a challenging outlook for the aluminium industry.

Recent New Zealand history with other international companies such as Mondelez and Bauer Media illustrate how little sentiment can be involved when these firms decide to trim their New Zealand operations.

While Southlanders affected by the uncertainty may appreciate the renewed political interest, they will also be aware much water has to flow over the turbines before it will be clear what might happen next.

 

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