Tiwai Point Aluminium Smelter
The facility, New Zealand’s only aluminium smelter, is at Tiwai Point, near Bluff. It imports alumina and processes it into primary aluminium. The plant's alumina is supplied from refineries in Queensland and the Northern Territory of Australia. Around 90 per cent of the aluminium produced at NZAS is exported, mainly to Japan.
The smelter was opened in 1971 following the construction of the Manapouri Power Station by the New Zealand government to supply it with electricity. It uses 13 percent of New Zealand's electricity, and is reported to account for 10 percent of the Southland region's economy.
In 1955, a geologist working for Consolidated Zinc Proprietary Ltd (ConZinc) identified a commercial deposit of bauxite in Australia on the west coast of Cape York Peninsula. The company investigated sources of large quantities of cheap electricity needed to reduce the alumina recovered from the bauxite into aluminium. In 1960, ConZinc reached an agreement with the government for it to build a smelter and power station using the hydroelectric capacity of Lake Manapouri and Lake Te Anau. In 1963, ConZinc decided not to build the power station, and following that decision the government decided to construct it, with power first being generated in 1969. Construction of the Manapouri Power Station attracted controversy for its environmental effects, with over 264,000 New Zealanders signing the Save Manapouri petition. With a supply of electricity to be available, ConZinc built the Tiwai Point smelter, opening in 1971.
Tiwai Point is the only aluminium smelter in New Zealand. In December 1980, the government announced a project that would build a second smelter at Aramoana, but opposition from the public, changes in the aluminium market, and the loss of a commercial partner meant the project did not go ahead.
The smelter uses the Hall-Héroult process to convert alumina (aluminium oxide) to elemental aluminium. Bauxite is mined in Australia and refined into alumina before being shipped to New Zealand. The smelter consists of three lines of P69 technology cells, with 208 cells each (i.e. 624 total), and one line of 48 CD200 technology cells. The third P69 Line was built in the early 1980s as part of Muldoon government's "Think Big" projects.
The smelter produces the world’s purest aluminium – 99.98 percent pure – and is one of two smelters in the world producing ultrahigh purity aluminium. In 2011 the smelter produced 354,030 saleable tonnes of aluminium, which was its highest ever output at the time. In 2015, it produced 335,290 tonnes.
The smelter's power demand from the national grid is about 570 MW. Most of the energy for the smelter is supplied from the Manapouri hydroelectric power station, via two double circuit 220 kV transmission lines. The facility is the largest electricity consumer in New Zealand, and uses approximately one third of the total electricity consumed in the South Island and 13% of the total electricity nationwide, equivalent to about 680,000 households.
New Zealand Aluminium Smelters has a contract for electricity supply with Meridian Energy for the continuous supply of 572 megawatts for the period 2013 to 2030. A variation of this agreement was signed in 2015.
Economic effects and threats of closure
NZAS reports that the facility employs 800 full-time employees and contractors and indirectly creates jobs for 3,000 people. The smelter is reported to account for 10 percent of the Southland region's economy.
Tiwai Point has frequently operated at a loss, such as in 2012 when it lost $548 million. Analysts have commented that the profitability of the smelter is most dependent on prices for electricity, alumina and the finished aluminium as well as the New Zealand dollar. Between 2008 and 2013, aluminium prices fell by more than 30 percent. Rio Tinto threatened to close the Tiwai Point smelter if it could not get a cheaper deal for electricity from retailer Meridian, or the Government failed to give it a substantial subsidy to cover losses.
Much media commentary in April 2013 focused on the impact of closure on both domestic power prices and share prices when the State Owned Enterprise and electricity generator Mighty River Power would be partially sold off to private investors. NZAS produced a report which claimed that if the smelter closed, there would be a permanent loss to Southland's GDP of about 7-8 percent and that 2-3 percent of Southland's population could move out of the region. Invercargill mayor Tim Shadbolt said it was a myth that closing the smelter would result in lower prices, and vowed to keep it open.
In August 2013, the New Zealand government agreed to make a $30 million payment to NZAS as a deal to support the smelter and to save jobs, exchange for agreeing the smelter cannot be closed before January 2017. Finance Minister Bill English said the Government would make no further contribution to support it, which he reiterated in 2015 following speculation that Rio Tinto was seeking to sell the smelter.
In 2016, an analyst First New Zealand Capital (FCNZ) utilities said that the smelter was thought to be breaking even, and that favourable currency rates and low alumina prices were helping matters.
Aluminium smelting via the Hall-Héroult process produces carbon dioxide as a by-product. The basic reaction is Al2O3 → 2Al + 3O; if all the oxygen at the red-hot carbon anode becomes carbon monoxide (that subsequently becomes carbon dioxide) then for one tonne of aluminium, 1.55 tonnes of CO would result, becoming 2.4 tonnes of CO2. However, if all the oxygen went directly to CO2, then 1.56 tonnes of CO2 would result. At the stated rate of 1.97 tonnes of carbon dioxide per tonne of aluminium, the production of 272,000 tonnes of aluminium in a year would emit 535,000 tonnes of carbon dioxide. In 2007, Tom Campbell, the chief executive of majority owner Rio Tinto Aluminium NZ, said that the smelter was among the top 5% of the world's 250 aluminium smelters in terms of low emissions. Metal produced by Tiwai Point is marketed under the RenewAl brand, which guarantees that less than four tonnes of CO2 is emitted for every tonne of aluminium produced.
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