Tiwai Point aluminum smelter to stay open

The Tiwai Point aluminium smelter in New Zealand will remain operational for another 20 years, thanks to a new power supply deal. Meridian Energy and New Zealand Aluminium Smelters (NZAS) have agreed on a long-term fixed price power contract until 2044.

The future of the smelter had been uncertain as its previous contract was set to expire at the end of this year. Meridian Energy’s chief executive, Neal Barclay, described the agreement as an “excellent result” after years of negotiation, benefiting both New Zealand and the Southland region.

The smelter, owned by global mining giant Rio Tinto, has faced challenges due to high transmission prices and fluctuating aluminium prices. Opened in 1971, it uses about 13 percent of the country’s electricity from the Manapouri power station.

In 2013, the New Zealand government paid the smelter $30 million to continue its operations. The new agreement includes provisions for reducing power usage during peak demand times, helping to stabilize the country’s energy supply and reduce carbon emissions.

NZAS chief executive Chris Blenkiron highlighted that this makes the smelter the largest storage battery in New Zealand. When the smelter cuts its power usage, it means less coal needs to be burned at the Huntly power station, lowering carbon emissions.

Rio Tinto Aluminium chief executive Jérôme Pécresse praised the collaborative effort that led to the deal. He expressed confidence that the smelter will continue to produce high-quality, low-carbon aluminium necessary for global energy needs.

Additionally, Rio Tinto is buying the minority stake in NZAS from Japan’s Sumitomo Chemical. Recently, aluminium prices have surged, doubling since the start of the pandemic, making this deal timely and beneficial for all parties involved.

The agreement ends a long period of uncertainty, securing a stable future for the Tiwai Point smelter and its contributions to New Zealand’s economy and energy sector.