The aluminium refinery at Tiwai Pt has been called many things during its 50 years.
A bluffing North Korea using high-noon tactics and eyeball stare-downs to crumble successive governments at the knees; a roaring, rumbling surplus to requirements at the edge of the world; a great-for-Southland bad-for-the-country, dirty, no good trickster.
Like a poker player with a good hand, the bargaining power was always in its favour. Mostly, it knew how to get its way. As Meridian Energy chief executive Mark Binns put it to a select committee last week: "We are not dealing with grandma."
In 1970, Comalco reportedly issued preferential shares to prominent New Zealanders including politicians and judges.
In 1976, it lobbied for the United States, the United Kingdom and Australia to intervene after Robert Muldoon pushed for a 650 per cent rate rise. It got 350 per cent.
In 1986, it took the government to court for trying to raise its rates.
In 2008, it threatened to close the smelter if the New Zealand Emissions Trading Scheme went ahead.
Even the refinery's very existence was the result of brinksmanship tactics.
The long running saga that came to another head this week when Rio Tinto, the major shareholder of the New Zealand Aluminium Smelters Ltd, which runs the smelter, baulked at a deal with state-owned Meridian Energy, which owns the Manapouri power station. Rio Tinto wanted to renegotiate the terms of its agreement, saying once more that the deal was too stringent. It talked about walking away.
State Owned Enterprises minister Tony Ryall revealed on Thursday that the Government was talking to Rio Tinto about "helping to bridge the gap" or, in other words, subsidise the smelter's contract talks with Meridian.
"This is nothing new," said economist Geoff Bertram, who has followed the company for decades. "It's just an extension of what they have always done."
In 1960, the government and Comalco had an agreement for it to build both a smelter and a hydro-electric power station. In return, Comalco would receive exclusive rights to the waters of Lake Manapouri for 99 years. But Comalco never built the smelter; said it couldn't afford to. In 1963, the government picked up the slack, agreeing to build the plant and sell electricity to Comalco at highly reduced prices that have never been revealed.
Murray Horton, chairman of the Campaign Against Foreign Control of Aotearoa, has long trumpeted the demise of the Tiwai Pt smelter and the company that owns it.
"It's corporate welfare," said Horton. "They have always been the biggest bludger in New Zealand."
Now, he said, it was acting like "North Korea" - the threats might be for real or they might be a bluff.
The argument in favour of the smelter has long been the benefit it brings to New Zealand. Certainly it's a big deal in Southland. The company produces $525 million a year, or about 10 per cent of Southland GDP. It also consumes about 15 per cent of all New Zealand's electricity.
And, while people in Southland would lose jobs if it closed, Horton says some things just aren't in the national interest. Besides, Southlanders have been a happy hostage to Tiwai Pt, he says. They have painted themselves into a corner and become a company town.
Mayor Tim Shadbolt is unapologetic. Not only did he help build the power station, which claimed the lives of more than a dozen Southlanders, but he has called himself a "mercenary" and a "salesman" for his region.
A CCORDING TO the analysis done by Bertram, for almost 20 years Comalco paid hardly any tax at all on its earnings. It only briefly paid its way in the first decade of this century when aluminium prices were strong.
For a long time, one of the biggest bargaining chips in Rio Tinto's favour was that the refinery was the only place that could take the 600 megawatts of power that Manapouri produces.
Aluminium prices, however, have plummeted and technology has accelerated. In time, all that power produced at Manapouri will be transferred around the country at a relatively cheap rate.
But all this creates a very curious and uncertain environment for the electricity industry.
What happens if the smelter does close down? What happens to huge amount of power that goes into Tiwai?
Transpower, which operates the transmission network, has thought of these scenarios before. Its systems operator, Kieran Devine, has even gone so far to speculate very seriously about how electric vehicles might be charged from the New Zealand grid. He calculates the leftover capacity from the closure of Tiwai would equate to more than enough energy to run 2 million electric cars by 2040.
To put it in perspective, Manapouri produces enough power to supply about 630,000 houses each year. It could run five Large Hadron Colliders. It could run two times Google's data storage network.
Bertram says power companies have been gouging the consumer for too long. With a simple write down of their assets Tiwai could give all New Zealanders 300kW hours free, each month, for ever. At current average power prices that's about $80 a month off your power bill, permanently.
"It's a chance return to some of the vision why state owned power was created in the first place - to raise living standards."
Managing director of Energy Link Greg Sise said it is difficult to predict how this would all affect the consumer. While a dump of power on to the market would drop the price for retailers there was still no control over what those retailers might charge consumers.
"It's all guesswork as far as we are concerned," he said. "[Tiwai Pt] makes the purest aluminum in the world and to shut down the plant that produces it - that is a big step. There is a lot at stake."
His guesswork, however, pointed to Meridian most likely wanting to pick up some extra clients. That could lead to price war among power providers.
The Mighty River Power share offer document, released on Friday, outlines the uncertainty and its potential affect on the whole electricity market.
"If New Zealand Aluminium Smelters makes a further significant reduction in electricity consumption, whether as a result of the closure of the smelter following any review or for any other reason, the resultant drop in demand could lead to sustained reduction in electricity prices in general," it said.
However, for the company to pull the plug on the deal and walk away might cost it as much as $400m, according to some estimates. In the end, as it was in the beginning, Rio Tinto's call will always be about economics, not politics.
- Sunday Star Times