Tiwai Point Aluminium Smelter
[7] Rio Tinto has threatened to close the smelter several times, for example in 2013 and 2020, but to date closure has been deferred after renegotiation of the price it pays for electricity.
[8][9][10][11] As of January 2021, Rio Tinto announced that it had reached an agreement with its power supplier Meridian Energy to pay a lower price in return for keeping the smelter running until December 2024.
[15] In 1955, a geologist working for Consolidated Zinc Proprietary Ltd (ConZinc) identified a commercial deposit of bauxite in Australia on the west coast of Cape York Peninsula.
The company investigated sources of large quantities of cheap electricity needed to reduce the alumina recovered from the bauxite into aluminium.
Most of the energy for the smelter is supplied from the Manapouri hydroelectric power station, via two double circuit 220 kV transmission lines.
[15] It has been described as uncontrolled, unconsented and untreated in complete absence of any regulatory oversight or recognition, being the largest stockpile of hazardous waste in Australasia and posing an estimated $NZ300 million liability.
[32] Analysts have commented that the profitability of the smelter is most dependent on prices for electricity, alumina and the finished aluminium as well as the New Zealand dollar.
[34] Rio Tinto threatened to close the Tiwai Point smelter if it could not get a cheaper deal for electricity from retailer Meridian, or the Government failed to give it a substantial subsidy to cover losses.
As a result, the Government announced it would subsidise Rio Tinto to keep the Tiwai Point smelter operating in the short term,[37][38] garnering criticism from business commentators and opposition politicians.
[18] Invercargill mayor Tim Shadbolt said it was a myth that closing the smelter would result in lower power prices for others, and vowed to keep it open.
[45] Finance Minister Bill English said the Government would make no further contribution to support it,[45] which he reiterated in 2015 following speculation that Rio Tinto was seeking to sell the smelter.
[32] In 2016, an analyst at First New Zealand Capital (FCNZ) utilities said that the smelter was thought to be breaking even, helped by favourable currency rates and low alumina prices.
[6] In October 2019, Rio Tinto announced a strategic review of the Tiwai Point Aluminium Smelter, including a wide range of issues associated with closure.
The NZAS chief executive Stew Hamilton said that they had been losing money for the previous 12 months, and that options ranged from operating at the status quo, which would require cheaper power, to closure of the plant.
[47] On 31 March 2020, Rio Tinto announced that it would close potline four, to ensure it could cope with the restrictions at the plant that are needed because of the coronavirus pandemic.
Potline 4 originally opened in 1996 but was turned off for six years between 2012 and 2018 before reopening as a result of an uptick in aluminium prices and a new deal with power supplier Meridian.
The National Party announced that, if it won the election, it would keep the smelter running for at least five years[49] and would facilitate negotiations between Rio Tinto, power companies and Transpower to achieve a more cost-competitive environment.
[54] Later, Labour announced that it would negotiate to extend the life of the smelter by three to five years if elected, seeking to protect jobs in the short term to provide time for the community to consider alternative options.
The supply new contracts were expected to provide greater certainty for the electricity sector as a whole, and lead to new generation proposals going ahead.
