Time wasted before the inevitable

It would not be too cynical to think sending a ''closure team'' to the Tiwai Point aluminum smelter may eventually form part of a plan to extract concessions to help the bottom line of the smelter's foreign owners.

But as critical as some may be of the motives of Rio Tinto's ''strategic review'' of New Zealand Aluminium Smelters (NZAS), anyone touched by the southern economy should be reluctant to dismiss it.

It is not being dismissed in Southland where, yet again, about 990 NZAS employees and contractors, and another 2000-plus people in jobs indirectly liked to the smelter, consider their future.

Small businesses this week added to the gathering chorus of southerners who want the Government to help retain a still-profitable industry worth nearly $400million a year to their economy.

But as they did so, many voices north of Invercargill called for the Government to tell Rio Tinto not to expect taxpayers to provide another multimillion-dollar sweetener to keep the plant going.

The National-led government gave a $30million subsidy to keep the pots glowing in 2013. That government, and now Energy Minister Megan Woods, made it clear that was a one-off.

The subsidy came as NZAS and Meridian Energy negotiated an electricity contract that could keep the smelter operating until 2030.

But that did not guarantee the smelter would remain viable. As the ink on the contract dried, then-NZAS boss Gretta Stephens made it clear the smelter had simply bought more time.

It had some short-term security, she said, but the smelter's combined electricity and transmission costs were still not internationally competitive. Such costs needed to change.

The chance to remove what might otherwise become leverage for NZAS seemed likely as the Electricity Authority considered how the national grid is funded.

The cost of transmission is recovered from everyone, regardless of how close they are to a power plant. NZAS gets most of its energy straight from Manapouri. Even so, it pays more than the cost of transmission, estimating it subsidised North Island lines by nearly $200million over the past 10 years.

In 2016, the authority proposed a regime estimated to save the smelter about $20million a year. This was cut after pressure from regions where prices would rise.

Thus, the chance to address a key complaint from a business whose value to the southern economy significantly outstrips its inflated contribution to national grid running costs was lost.

It took time to miss this chance, but there is arguably little evidence the powers that be planned for the all-too-predictable time Rio Tinto again considered the smelter's future.

In 2013, the Green Party welcomed the decision to ''postpone the smelter's closing date'' as creating a window of opportunity to come up with a strong plan for a post-smelter future.

It said foreign companies could hold New Zealand to ransom to keep their New Zealand operations going as long as the country had no clear alternative jobs plan.

The Greens are now part of the Government, but the Government has stopped short of explaining how a new-look Southland economy would emerge in a post-Tiwai future.

Certainly, some suggest the wider South Island might emerge better off if the electricity Tiwai used to use is redistributed across the electricity network. But even then, it is clear nothing has been done since 2013 to ensure electricity can be sent anywhere other than Tiwai: the lines need to be upgraded, and that will cost hundreds of millions of dollars.

In Southland, the community-led Fight for Fairness campaign says governments are happy to give tax breaks to Hollywood so NZAS should get a fair deal on transmission costs. As NZAS again casts doubt on workers' future, a fair deal is all southerners are after.

Comments

"NZAS gets most of its energy straight from Manapouri. Even so, it pays more than the cost of transmission, estimating it subsidised North Island lines by nearly $200million over the past 10 years."

That is exactly right !!!
$20 million a year transfer of wealth from the hard working south to the northern masses.
If the place closes down we have a $400 loss to the Southland economy and the north losses it's $20 million subsidy as well.
What do the Greens have to say about that ?
We don't like big companies holding NZ to ransom.
We need alternative jobs plan for when we can get rid of them
What have they done?
Nothing because they have been busy convincing our kids the world will tip over the climate cliff in 10 years.
They real threat to our children's future is the over active imagination of the loony left and their tenuous grasp on reality.

Overthinking to pin the rap on the Greens. It's about whether the government subsidises private industry.

 

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