Tiwai's long-term future queried

Last updated 05:00 01/04/2013
The Tiwai Point aluminium smelter operator is seeking lower power prices from Meridian.

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A former Tiwai Pt smelter boss says the Government should subsidise the New Zealand Aluminium Smelters in the short term but there should be concern about the long-term future of the smelter.

Kerry McDonald, who was chief executive of previous Tiwai smelter owner Comalco, from 1988 to 2003, said the plant was not as important to the New Zealand economy as it once was.

Mr McDonald, also a former director of the New Zealand Institute of Economic Research said it was important for smelter owners and the Government to find middle ground, which would involve a significant compromise on both sides.

It may result in a five-year deal or longer to maintain the smelting operation, he said.

"There is no doubt that when the smelter closes it will be a significant loss".

A short-term compromise would reduce the disruption caused by the immediate shut down of the smelter, which would be disastrous in many respects, he said.

The labour productivity at the smelter was high and workforce pay went into the local community and would be an enormous loss if it closed.

"I think there should be concern about the smelter's longer-term future and whether it will be viable beyond the short term," he said.

"However, there needs to be a very earnest effort to maintain it in the short term and allow both sides to really test options that might be available and if there aren't any, they should allow for an orderly transition."

He said the Government should subsidise Tiwai in the short term to bridge a gap but there would have to be something in it for them. "It is important that the language is not about ‘subsidy'. It needs to be about getting a ‘win, win' situation."

For the government a win situation would be keeping the national benefits that flow from the smelter, he said. "If both parties are realistic and willing to explore opportunities then you can get a win, win out of this."

Meanwhile, it has been reported that French industrial renewal minister Arnaud Montebourg has demanded Anglo-Australian Rio Tinto rule out closing an unprofitable aluminium plant in southern France. Rio Tinto Alcan is in talks to divest the Saint-Jean-de-Maurienne plant to German aluminium company Trimet in a deal backed by a French government investment fund.

"Rio Tinto has a responsibility that negotiations are fulfilled as the French government will not accept the other solution, a closure, that Rio Tinto is still keeping on the table," he said.

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The French aluminium plant has been threatened with closure for months, ever since Rio Tinto announced it would end operations after the expiry of a sweetheart deal with France's power giant EDF that provided the plant with a cheap electricity bill.

Rio Tinto Alcan executive Arnaud Soirat said: "We are working hard so that this negotiation reaches a conclusion, but it is clear that if it does not the last option would be to close the site."

- The Southland Times

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