New Zealand Aluminium Smelters
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New Zealand Aluminium Smelter Limited (NZAS) is a joint venture operation owned by Pacific Aluminium (New Zealand) Limited (79.36 per cent) and Sumitomo Chemical Company (20.64 per cent). Pacific Aluminium (New Zealand) Limited, the managing partner, is a wholly owned subsidiary of Rio Tinto.
NZAS is New Zealand’s only aluminium smelter and is located on Tiwai Peninsula, across the harbour from the community of Bluff.
The smelter, located at Tiwai Point on the southern coast of the South Island, was opened in 1971 after a joint venture construction (50% Comalco, 25% Sumitomo Chemical Company and 25% Showa Denko KK). Comalco later purchased Showa Denko's share in April 1986. It is one of the 20 largest aluminium smelters in the world and, according to Rio Tinto Alcan, it provides NZ$3.65 billion worth of economic benefit to the New Zealand economy. It produces the world's highest purity primary (i.e. directly refined made from alumina ore) aluminium. The ore is mostly imported from Australia, while the finished product mostly goes to Japan.
The smelter currently consists of 3 lines of P69 technology cells, with 208 cells each (i.e. 624 total), and one line of 48 CD200 technology cells. In 2011 the smelter produced a record amount of aluminium, 354,030 saleable tonnes. The previous record production was 352,976 tonnes in 2007. In 2009, the smelter's production was 271,902 tonnes of aluminium and that year it employed approximately 750 full-time personnel and 120 contractors. The third P69 Line was built in the early 1980s as part of Muldoon government's "Think Big" projects.
The smelter uses up to 610MW of electricity which is mostly supplied by the hydroelectric Manapouri Power Station. The perceived reliability of power from Manapouri played a major role in the choice of building the aluminium smelter in Southland, with both the power plant and the smelter having been constructed as a joint project. The facility is the largest electricity consumer in New Zealand, and uses approximately one third of the total power of the South Island and 15% of the total power countrywide.
The electricity contract with Meridian Energy (and its predecessors) has long been criticised as being secret and effectively a tax-payer funded subsidy (or corporate welfare) for a large transnational corporation. In 2007 New Zealand Aluminium Smelters negotiated a new contract for electricity supply with Meridian Energy for the continuous supply of 572 megawatts for the period 2013 to 2030. Prior to the contract negotiation, New Zealand Aluminium Smelters had said that it could obtain electricity from a coal-fired station at less than 7 cents per kilowatt hour. In 2007, the new contract price was estimated to be 4.7 cents per kilowatt hour or one quarter of the price charged to the domestic consumer.
In 2007, Tom Campbell, the then chief executive of majority owner Pacific Aluminium, said that the smelter was amongst the top 5% of the world's 250 aluminium smelters worldwide in terms of low emissions. In 2007, 1.97 tonnes of carbon dioxide was released for every tonne of aluminium produced.
In October 2011, Rio Tinto Alcan announced its intention to transfer New Zealand Aluminium Smelters Ltd and several Australian assets into a new entity called Pacific Aluminium. This entity would be managed separately until it is sold.
In an announcement to the New Zealand Stock Exchange on 9 August 2012, Meridian Energy advised that it had been approached by Pacific Aluminium, a business unit of Rio Tinto Ltd, the majority shareholder of New Zealand Aluminium Smelters Ltd (NZAS), to discuss potential changes to the electricity contract with the smelter that was renegotiated in 2007, and was to take effect in January 2013.
In 2013, Rio Tinto threatened to shut down the loss-making Tiwai Point smelter, unless it was able to continue re-negotiating favourable electricity prices with Meridian Energy. Meridian is one of several stated-owned enterprises proposed for a partial float on the sharemarket by the John Key National Government, which wants to get the maximum possible sale price, and which would also be potentially in conflict with Rio Tinto's desire for low electricity prices. As a result, the Government announced it would subsidise Rio Tinto to keep the Tiwai Point smelter operating in the short term., garnering criticism from business commentators and Opposition politicians. However, on 2 April 2013, John Key said Rio Tinto had rejected the Government's offer, preferring a "longer-term deal than the Government was prepared to offer". John Key stated that if the smelter can't sustain itself financially, the government wasn't interested in keeping it open long-term.
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The new contract - understood to be about 4.7c a unit
- "NZAS Sustainable development report" (PDF). New Zealand Aluminium Smelters Limited. 2007. Retrieved 24 August 2011.
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