It has been a long wait for Southland. Falling aluminium prices around the world were hurting owners Pacific Aluminium (NZ) Ltd and Sumitomo Chemical Company.
Rio Tinto, the ultimate owner of New Zealand Aluminium Smelters, has been selling or trying to sell its smelters around the world as prices plummeted.
Always in the minds of Southlanders was whether Tiwai Point would be next. Restructuring was carried out a few years ago. High-paying jobs were lost, ultimately affecting the local retail economy and housing market.
The smelter will now reboot its mothballed fourth potline, having secured more than a four-year electricity deal with Meridian Energy, although it is a deal with several break clauses.
The smelter company will create up to 32 jobs, taking the workforce to about 860. There will be a need for housing and support services in the community for the new employees. Another 85 tonnes of metal a day will need to be moved from the smelter, good news for firms already contracted to move it and others who may get the chance to tender.
Line 4 alone will contribute an additional 0.2% to New Zealand export earnings, it is forecast. It was closed in 2010 as production became unprofitable due to low global aluminium prices and high electricity spot prices.
The agreement with Meridian indicates the strength and competitiveness of the energy market in New Zealand. Electricity produced in New Zealand can be delivered in a competitive market to support industry growth.
Aluminium produced at the smelter creates 10 times less carbon than the product made in a country using mainly coal.
Also, aluminium is the fastest growing input in the automotive industry, as manufacturers seek greater fuel efficiency.
The added production from Tiwai comes at a particularly important time for global trade. United States President Donald Trump's Administration said in March it would impose tariffs of 25% on steel imports and 10% on aluminum in a bid to staunch imports from China, which it says had driven down prices and put US companies out of business.
It granted temporary exemptions to allies such as Canada, Mexico and the EU. The Trump Administration has agreed to allow those exemptions to continue for a month, but added a full imposition of tariffs remained an option. New Zealand has missed out on an exemption and needs to quickly consider its options.
Having a low-carbon product to sell on world markets, particularly to a car industry being moved quickly towards electric vehicles, will make Tiwai's aluminium attractive to car makers around the world.
Of course, there will be critics of the deal Tiwai has struck with Meridian, which is backed up by contracts from Contact Energy, Genesis Energy and Mercury.
The previous government was harshly criticised for seemingly bailing out the smelter company, a move which in the end saved hundreds of jobs. The fact remains the smelter plays an important part regionally and nationally, and the deal between electricity company and the smelter comes without a real cost to taxpayers.
The Government has $1billion a year to hand out on regional programmes, almost none of it earmarked for the South. The decision by the smelter to bring in Line 4 in about six months comes with minimum risk to the Government. It is a brave decision by the smelter.
The arrangement further demonstrates New Zealand remains a good place to invest in and the electricity markets provide more certainty than in many other countries. This is a real source of competitive advantage for New Zealand internationally.
