6 Apr 2013

Invercargill council to fight for smelter

5:56 am on 6 April 2013

Invercargill City Council is to fight to keep the Tiwai Point aluminium smelter open.

The council held an emergency meeting on Friday to hear from experts and trade union officials.

It resolved to take out full-page advertisements in all major New Zealand newspapers to get across what it calls the "correct information" about the deal Meridian Energy and the smelter's owner, Rio Tinto, are trying to negotiate over power prices.

Australian-based Rio Tinto has rejected the New Zealand Government's offer of a short-term subsidy for power, saying it will go back into talks with Meridian.

Invercargill mayor Tim Shadbolt said on Friday that Meridian has room to move much further in the price it charges Rio Tinto, as the energy company made a $200 million profit last year while the smelter made a $50 million loss.

"I am angry. And I think a lot of people in our community - and we think throughout New Zealand - should be angry with what's happened, because we've lost our competitive edge within the international community in an area that there is no reason."

Tim Shadbolt said the idea that if the smelter closes, power from Meridian's hydro station at Manapouri will flood the market giving all New Zealanders cheap electricity is simply not the case, and there would be huge costs in sending electricity to the North Island.

He said New Zealanders need to understand that the smelter is nowhere near the end of its life.

The mayor said Bill English as the MP for Southland, Finance Minister and, ultimately the shareholder of Meridian Energy, should be doing more to save it.

Meridian Energy chief executive Mark Binns said the company would have to drop its offer by hundreds of millions of dollars in order to strike a deal with Rio Tinto.

Mr Binns said on Friday the power price it has offered is already heavily discounted and the problem is the discount is not good enough for the Australian miner.

Talks will continue with Rio Tinto for the next couple of weeks, he said.