NZAS Turned Down NZ$35 Million In Clean-Up Assistance From National Government

NZAS Turned Down NZ$35 Million In Clean-Up Assistance From National Government

The Tiwai aluminium smelter in New Zealand recently affirmed its commitment to clean up hazardous waste at the plant, but documents brought to light this week reveal that the New Zealand Aluminium Smelter turned down an offer of several million dollars from the national government to aid in that process.

NZAS’s statement declared that the plant’s management continues to be “committed to closing the smelter in a responsible manner including removing all spent cell lining from the site” when it eventually moves on from the area. Last year the firm extended its deal with local power companies to last through the end of 2024.

However, according to documents obtained via an open records act request, NZAS was offered up to NZ$35 million in assistance from the government to aid in the endeavor, but the offer was rejected. The offer, dubbed the Southland Transition Bond would have required NZAS’s owners Rio Tinto Group and Sumitomo to put up NZ$300 million of its own money and to remain open through 2024.

“Unfortunately, Rio Tinto and Sumitoto have declined to make any substantive remediation commitments prior to the finalisation of a preliminary disclosure plan next year, and has rejected the Government’s proposal of a bond payment linked to remediation, without tabling any alternative suggestions,” said Treasury official Maureena van der Lem to Rio Tinto’s Andrew Horvat in an email at the end of last year.

Though Rio Tinto has long sought help from the government to lessen power costs at the plant, the Treasury department concluded in February that it was an “open question whether New Zealand Aluminium Smelters will ever make adequate and meaningful information available to enable the Crown to make an accurate assessment of the true extent of the remediation requirements, their likely cost, and NZAS’ minimum legal requirements”.

“Rio Tinto’s negotiating position to date has been to deny the Crown access to accurate information about the state of NZAS’ environmental remediation obligations, and to make no meaningful commitments.”

Per Treasury officials, NZAS’s failure to provide information of its own on a timely basis only shortens the time the government has to compare that information with information culled from other sources and draw a conclusion about any differences.

The department also expressed doubt as to whether the plant would close in 2024 as well.

“By that time, it is anticipated that transmission infrastructure enhancements will significantly reduce NZAS’ bargaining power with Meridian,” the department reported.

“This will further strengthen the Crown’s bargaining position and may enable the Crown to seek additional commitments from the smelter if any potential agreement.”

Per the Treasury department, NZAS’s new electricity deal assures the plant of “robust” profitability save for a significant drop in global aluminium prices. They reckon that the new power deal would be all it would take to keep the smelter running for the next three years.

“While the economics of Tiwai Point are likely to look more challenging in 2024, it remains possible that NZAS may be able to continue operations past this point.”

“Presumably part of the value Rio Tinto places on transmission relief includes an expectation that it will continue past 2024 and be ‘baked in’ for future operations,” concluded the Treasury report.