Bluff’s Tiwai Point aluminium smelter will remain open until at least the end of 2024, after mining giant Rio Tinto reached a new electricity agreement with Meridian Energy.
In a notice to the Australian and London stock exchanges, Rio Tinto, the smelter’s majority owner, said the extension until December 31, 2024, provides certainty to employees and the local community.
The planned closure, first confirmed last year and originally planned for August this year, threatened 1000 jobs. The smelter supports a further 1600 indirect jobs in Southland.
It came after the owners in 2019 said they were carrying out a strategic review of the site, pointing to "market conditions and high electricity costs". It’s hoped the deal with Meridian Energy will allow the smelter to be competitive for the next four years.
Discussions with the Government continue in regards to the smelter’s high transmission costs, the announcement said.
During their election campaign last year, Labour said it would negotiate an extension of operations at the smelter to buy it time to form an economic transition plan for Southland. National at the time also promised to facilitate negotiations between the smelter, Transpower and power companies.
Today, Deputy Prime Minister Grant Robertson said the extension provided a timeline for the Southland community to work with the Government to work out what would happen after the smelter closed.
“Today’s news is particularly welcome given the economic uncertainty created by the global Covid-19 pandemic," Robertson said.
"New Zealand’s strong economy compared to the rest of the world, and steady political system, means this country is a great place to do business, and we welcome this commitment from Rio to continue its operations in Southland for the next four years."
He confirmed discussions continued between the Government and Rio Tinto.
“Understanding the extent of the environmental impact of the smelter and removal of toxic waste from this site remain a bottom line for the Government,” he added.
Rio Tinto still planned to eventually close the smelter. But, chief executive Alf Barrios said the extension would support “extensive stakeholder consultation, including within the Southland community”.
“We are pleased to have reached an agreement with Meridian Energy that will enable the Tiwai Point smelter to continue producing some of the lowest carbon aluminum in the world,” Barrios said.
“The agreement improves Tiwai Point’s competitive position.”
Meridian Energy confirmed the new agreement in an announcement on the NZX.
“We have worked hard to provide solutions that we believe were of lasting value to the Smelter and acceptable to our shareholders,” Meridian chief executive Neal Barclay said.
“We’re pleased that Rio Tinto has accepted this offer, which will now provide certainty for the Southland community.”
The smelter is New Zealand's biggest electricity consumer, using a third of all the electricity supplied in the South Island, and about 13 per cent of the electricity nationwide.
NZAS is a joint venture between Rio Tinto (79.36 per cent) and Sumitomo Chemical Company Limited (20.64 per cent).