Future still uncertain for Tiwai Point

The Electricity Authority’s proposal to reform its transmission pricing methodology might be "too little and coming too late", New Zealand Aluminium Smelters (NZAS) says.

The NZAS executive team had argued for years the firm was paying too much for improvements to the electrical grid, general manager Stew Hamilton said.

The cost was affecting the ability of its Tiwai Point smelter to make money; the company had posted a $46 million loss for 2019.

A proposed change by the Electricity Authority announced in February could open the way for Tiwai Point to apply to pay less to Transpower in transmission charges, which cost it between $60 million and $70 million a year.

Mr Hamilton said the company was engaged in the consultation process.

However, a result could come too late as the company had been trying for years to remain internationally competitive.

"We’ve been engaged in that process and trying to continue to push. But at the moment the current proposal — it looks like — it will be too little and coming too late. We are still pushing to get a competitive price for power."

The proposal comes as NZAS owner Rio Tinto carries out a strategic review, which it has indicated could result in the Southland smelter’s closure and the loss of about 800 jobs.

The results of the review, which started last year, had been expected to be released by March, but a decision on the aluminium smelter’s fate has been postponed due to the outbreak of Covid-19.

Mr Hamilton said last week NZAS was awaiting the outcome.

When questioned about how staff were coping with the review’s delay, he said there was "a lot of anxiety and stress — coupled with Covid-19 lockdown".

He said NZAS employees had continued to work through the lockdown; the stress of adapting to operate safely under the Covid-19 restrictions had been compounded by the question mark hanging over the site’s future.

The way the team had pulled together in such a trying time was very impressive, he said.

"It shows the strength of our team and I feel very proud to see that."

"[But] we need to try to provide some future direction sooner rather than later for employees."

He said he did not know when the outcome of the review would be announced as directors and executives were focusing on staff safety during the Covid-19 pandemic.

A Rio Tinto spokeswoman said the company would not comment further.

luisa.girao@odt.co.nz