Tiwai aluminium smelter proves to be a political hot potato

Monday, 31 August 2020

Gore District Mayor Tracy Hicks says in pure political terms Tiwai may not be a vote winner.

Gore District Mayor Tracy Hicks says political parties are on a ‘’hiding to nothing’’ to agree to reducing the transmission costs for the Tiwai Point aluminium smelter ahead of the election.

‘’They [smelter owner Rio Tinto] are paying for more transmission of electricity than they fairly should be, and if that is changed, or shifted, then the rest of the community has to pick that up,’’ he said.

‘’So it’s a really hard challenge for anyone to deal with.’’

In ‘’pure political terms’’ it would not be a vote winner, he said.

Hicks wants the nation’s political parties to tell the Southland people what their policies are around the smelter ahead of the October general election, as he doubts the transmission pricing issue will be resolved before then.

Rio Tinto announced nearly two months ago it would close the smelter in August 2021, saying the business was no longer viable given high energy costs and a challenging outlook for the aluminium industry.

The closure would result in the direct loss of 1000 jobs, with 1600 jobs indirectly connected to the smelter also under threat, the company said.

Since then, Southland leaders, including Hicks, have been lobbying the Government to step in and help ensure the smelter stays open for at least five more years.

* Tiwai decision must be made soon, Southland leaders say

The Tiwai Aluminium Smelter with Bluff Hill in the background. Will it stay open for another five years?

This would allow other industries to become established so when the smelter does eventually close they could fill the gap.

Hicks said the nub of the smelter issue was the high transmission costs it faced.

‘’We need the Government to agree to speed up the introduction of what’s called the Prudent Discount Provision in the electricity pricing system, which would allow fairer power pricing regime for the smelter.’’

Given it may not be sorted soon, he wants to know whether the present Government [and other parties if elected] will commit in the short term to stumping up cash to bridge the gap in Rio Tinto’s transmission costs so the plant could stay open beyond 2021.

This will allow for the jobs of the smelter workers and others to be retained.

He also wanted to know what Labour and the other political parties would do to help other industries get established in Southland.

Finance Minister Grant Robertson declined to add to his earlier response in which he said discussions about the smelter were ongoing.

Last week, National Party leader Judith Collins said if the party was elected in October, it would want to see the current transmission price path negotiated to a point the smelter could commit to a future beyond the proposed hard-close date of August, 2021.

Hicks said he was encouraged that National understood the transmission costs ‘’needed to be fixed’’ but he wanted the party to be more specific about how that would happen.