Tiwai Point Aluminium Smelter Begins Negotiations For Power Contract Beyond Planned 2024 Closing

Tiwai Point Aluminium Smelter Begins Negotiations For Power Contract Beyond Planned 2024 Closing

New Zealand Aluminium Smelter (NZAS) said this week it has opened negotiations with local power companies on solutions for extending the plant’s life beyond the slated closing at the end of 2024.

The Tiwai Point aluminium smelter ended its power contract with Meridian Energy for NZ$0.55 per kilowatt hour through the end of this decade. Ultimately the parties renegotiated a deal for NZ$0.35 per kilowatt hour that would run through 2024.

Publicly Meridian said it wished to be a part of the aluminium plant’s long-term future, but sources have told local media that it would prefer the Tiwai Point aluminium smelter meet its power needs on the open market for the short term.

It is likely that NZAS will pay more for power from Meridian in the future, especially after government regulators suggested that local customers were paying NZ$200 per year more for electricity due to the Tiwai Point smelter deal.

NZAS’s CEO Chris Blenkiron told local media this week that certainty to staff and the surrounding community is of particular concern to the firm.

“There is lots of work to do, but we believe there is a positive pathway to securing a long-term presence for the smelter.”

The aluminium smelter’s current situation has it shutting down entirely at the end of 2024. However, Ian Collier, chairman of power company Great South, echoed Blenkiron’s concern for certainty around the aluminium smelter’s operation.

“Until we have certainty as a region as to what the future of the smelter is, that impacts on other decisions that need to be made [for the region].”

Collier said that his firm’s negotiations with NZAS would not be the same as it has been in previous attempts. He went on to specify the importance of successful negotiations with the aluminium smelter.

“There’s an end date for the current supply contract so we need those parties to get around the table and negotiate the future of the smelter […] so decisions can get made and we can move on with or without the smelter.”

Collier noted that there were hundreds of workers and many more businesses that depend upon NZAS for their livelihood who deserve to have certainty regarding the aluminium plant’s future.

Per Invercargill Mayor Sir Tim Shadbolt, NZAS’s big announcement for the region is a signal as to the aluminium smelter’s commitment to staying in business long term.

“The economic benefits to Southland of the annual NZ$400 million it contributes to the local ecomony, while it remains open, can not be understated.”

Whether the desired power deal comes to fruition or not, NZAS would be responsible for remediating the site, reiterated Blenkiron.

“Work is already underway to remove waste, improve our environmental performance, and continue building enduring relationships with our community,” Blenkiron concluded.