A National Government will facilitate negotiations between Rio Tinto, power companies and Transpower to achieve a more cost competitive environment to keep the Tiwai Point Aluminium Smelter open.
New Zealand is losing thousands of jobs every week due to the largest economic crisis in a generations. National recognises the need to support existing employment opportunities and protect the 2260 jobs, both at Tiwai and in the wider community, from the hard close of the smelter on August 31st, 2021.
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 smelters hard-closure.
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. Based on this, we understand that a commercial deal could be reached.
That deal alone would result in a more reasonable operating environment for the smelter’s operators, but National would do more.
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.
In exchange for this deal, we would require a plan from Rio Tinto for the clean-up of the site and dealing with the waste when it closes.
While creating certainty in the medium term for Southland, National would have an eye to the future.
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.
This is a better deal than Labour’s $4 billion pumped hydro proposal, which is many years away, and there is no surety that the $30 million investigation will support the project.
National will also invest in improving Southland’s internet connectivity, to allow new industries to locate closer to the renewable energy that Manapouri provides, to ensure the development of other industries and future jobs.
Southlanders deserve a longer-term commitment based on sound commercial negotiation. The Government’s current hands-off approach falls short of what Southlanders should expect.
This isn’t just about the $406 million Tiwai Point contributes to the Southland economy each year or the 2260 jobs the plant supports, it’s also about the impact closing it will have on global emissions.
Tiwai’s closure wouldn’t change global demand for aluminium but it would remove one of the lowest emission and internationally efficient producers of very high quality aluminium from the global network.
More than likely Tiwai’s production would be replaced by a coal-fired smelter in another country.
That would increase global emissions by 5.2 million metric tonnes of carbon dioxide equivalent [5.2mt CO2e], representing a 6.6 percent increase in New Zealand’s total emissions.
Put another way, it’s the pollution impact of a near doubling of the 3.4 million passenger cars on New Zealand roads.
If we’re serious about addressing climate change we need to find a way of keeping Tiwai Point open.