Rio Tinto has agreed to a new electricity agreement with Meridian Energy that allows New Zealand’s Aluminium Smelter (NZAS) to continue operating the Tiwai Point aluminium smelter until 31 December 2024. The extension provides certainty to employees, the local community and customers while providing more time for all stakeholders to plan for the future.
NZAS is New Zealand’s sole aluminium smelter. It commenced production in 1971 and produced 353,293 tonnes of aluminium in 2019.
NZAS is 79.36 per cent owned by Rio Tinto and 20.64 per cent owned by Japan’s Sumitomo Chemical Company.
In July 2020, Rio Tinto announced the planned wind-down of operations and eventual closure of NZAS, scheduled for August 2021.
The decision followed a strategic review and extensive discussions with a wide range of stakeholders, which showed the business is no longer viable given high energy costs and a challenging outlook for the aluminium industry.
Today, Rio Tinto advised that while discussions with the New Zealand government are progressing in relation to their commitment to addressing the smelter’s high transmission costs, a new agreement had been reached with Meridian Energy in relation to power prices, making the smelter economically viable and competitive over the next four years.
The extension also provides time for detailed closure studies to be completed and for NZAS to support the government and Southland community in planning for the future.
Rio Tinto noted that plans for the eventual closure of the Tiwai Point smelter will include extensive stakeholder consultation, including within the Southland community and will reflect the company’s robust closure and remediation standards.
Rio Tinto Aluminium chief executive, Alf Barrios, said the agreement with Meridian Energy will enable the smelter to continue producing some of the lowest carbon aluminium in the world.
“This agreement improves Tiwai Point’s competitive position and secures the extension of operation to December 2024. It also provides Rio Tinto, the New Zealand government, Meridian, and the Southland community more time to plan for the future and importantly gives our hard-working team at Tiwai and our customers the certainty they deserve.”
NZAS contributes $406 million to the Southland economy (6.5 per cent of Southland’s GDP) with export revenue of around $1 billion each year. Approximately 990 full time equivalent employees and contractors work at the smelter.
