25 Aug 2017

Tiwai Point smelter's chances looking better - Meridian

1:45 pm on 25 August 2017

The Tiwai Point aluminium smelter looks likely to stay open, according to the company most closely associated with its daily operations.

Tiwai Point smelter

Tiwai Point smelter Photo: Wiki Commons

Meridian Energy directly or indirectly supplies all the electricity - the smelter's most expensive input - to keep the smelter working.

For years, the smelter complained that it paid too much for electricity, saying it wasn't economic, and it might have to close down.

If it did, it would take 780 direct jobs, 3000 indirect jobs and $600 million of exports with it.

Outgoing chief executive Mark Binns, unveiling Meridian's annual financial result, said that was unlikely to happen, however.

"The smelter is now, in my view, in a far better position than it has been in the five and a half years that I have been dealing with its owners," he said.

"I would rate the chances of Tiwai closing any time soon for financial reasons as being exceptionally low."

Stephen Canny of Venture Southland agreed with this positive view of the smelter's future, and credited the actions of its management.

"They have remained globally competitive, which is a very significant achievement," he said.

"They have managed to be very effective but they also produce the world's highest-purity aluminium consistently."

The smelter owners themselves have not reacted specifically to Mr Binns' remarks - but the company notes that world prices have risen more than 30 percent from 2015. Managers also said the price of electricity transmission was more than twice its bottom line profit, and aluminium prices still remained lower than their peak a decade ago.

Australian media commentary has also suggested two companies - the giant Anglo Swiss conglomerate Glencore, and the US company Century Mining - were interested in buying Tiwai, along with smelters in Australia.

Mr Binns suggested the Tiwai smelter would be a better buy than its Australian counterparts.

"You look at Pacific Aluminium and its set of assets," he said, "I am not a smelter person but if I was going to own a smelter, I would rather own one in New Zealand than in Australia.

"The issue in Australia is where are you going to get the energy - there are some real issues about energy security in Australia."

Further information on any possible sale of the smelter would not be known until one of the companies involved said something definite.

But he said the impact of these on companies viability appears far less than it was.

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