Negative effects of smelter closure viewed as huge

There are no winners if Tiwai Point aluminium smelter closes, the president of the Southland Chamber of Commerce says.

Neil McAra was among community and business leaders who met yesterday to discuss the possible effect of the smelter's closure and prepare a strategy to advocate for fair operating conditions.

SIT chief executive Penny Simmonds, Invercargill mayor-elect Sir Tim Shadbolt and others also attended the meeting.

Earlier this week, mining multinational Rio Tinto said it was considering closing its Southland plant as part of a strategic review.

Mr McAra said the ripple effect of a potential closure or downscaling could be not underestimated.

"This will significantly affect business, housing prices, unemployment, the social and cultural fabric of Southland. It is not dramatic to say it would be utterly devastating to our region."

He said the belief the closure of Tiwai would result in cheaper power prices for the rest of the country was unfounded.

"The smelter has to give 12 months' notice to terminate its contract with Meridian, which gives electricity generators ample time to adjust supply to the market - when demand goes down supply follows.

"New Zealanders will not get cheaper power. In fact, they would have to pay millions of dollars to build more grid infrastructure to get power out of Southland to the north as right now the grid cannot handle the extra volume."

Mr McAra said he would continue to advocate hard to support a model to enable businesses in the region to be "commercially sustainable instead of being sucked dry to fund transmission infrastructure in the north of the North Island".

"Nobody wants a handout, we just want fair and equitable operating conditions."