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Emissions bill 'puts smelter at risk'

The Dominion Post
Last updated 00:17 13/05/2008

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The owners of New Zealand's only aluminium smelter have warned that the plant could close, putting 3500 jobs at risk, if the Government's emissions trading scheme passes in its present form.

Rio Tinto Alcan, which owns nearly 80 per cent of the Tiwai Pt smelter in Southland, told MPs hearing the emissions trading bill that the scheme was likely to make the operation unviable.

The multinational flew in regional president Xiaoling Liu to warn the select committee considering the bill that such a move could force the operation overseas, threatening the jobs of the 900 people working at the smelter and the 2600 indirectly employed.

"Rio Tinto, as an international business, will continue to support the New Zealand operation for as long as it is a cost-competitive location. Frankly, you need to be aware it may not remain the case if this bill is passed in its current form."

The general manager of the New Zealand operation, Paul Hemburrow, said if the bill was not changed to soften the blow till aluminium smelters overseas faced similar costs, the smelter would be "on a path to closure".

The bill in effect taxes all greenhouse gases and will be phased in across the economy. But the smelter is the country's biggest electricity user, and aluminium production creates the greenhouse gas carbon dioxide.

Power companies will be brought into the scheme from January 2010 and will pass on the cost to customers.

The smelter has a deal with generator Meridian to use power from Lake Manapouri, but must buy extra at much higher spot prices.

Though it will be given free carbon credits to cover its emissions trading costs, these will be phased out from 2018.

Mr Hemburrow said Rio Tinto wanted the phase-out of allocations delayed till the international application of emissions trading.

Climate Change Minister David Parker said the Government was aware of the risk some industries faced from countries with no emissions trading, which was why it had protected them with free allocations and last week extended the phase-out by five years.

"But at some stage industry has to start paying for its greenhouse gas emissions, because the cost doesn't go away, it just gets paid for by taxpayers instead of emitters."

The smelter was one of several industries that predicted dire consequences from the scheme.

The Timber Industry Federation's executive director, Wayne Coffey, said that up to 29,000 jobs could be lost as forest owners stopped logging to cash in on carbon credits. Lack of supply could cause the price of wood to jump 40 per cent, leaving sawmillers unable to compete internationally and undermining the Government's affordable housing drive.

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Federated Farmers and state-owned Landcorp said that the scheme would hit profitability hard when agriculture was brought in from 2013.

But the Environmental Defence Society said the business sector was overstating the impact.

Labour MP Paul Swain noted that nearly every industry group appearing before the committee supported emissions trading but said that, if its sector was covered, "we're all stuffed".

- With NZPA

 

13 comments
Steve W   #13   05:26 pm Jan 28 2009

There is overwhelming, uncategorical evidence that human activity is directly linked to climate change.

Malcolm   #12   05:26 pm Jan 28 2009

And still there is no evidence that links climate change to human consumption. Only that climate change has been happening for many millennium, and then, like now - man is just a bit part player in the greater scheme of things. The earth hasn't warmed for the past 10 years - yet the hysteria has been greatest in that time.

Jimmy   #11   05:26 pm Jan 28 2009

How many of those who wrote comments actually live in Southland. manapouri also supplies the grid. If half the light we see on the interim weather of Auckland and the likes were turned off we would have no problems. Also where does most of the N.I. power come from, the South Island lakes.Tiwai contributes a considerable amount to the Southland economy. So you see the N.I needs us but we can survive without them.

YR   #10   05:26 pm Jan 28 2009

Yeah well, what's more important? The future of our planet or the temporary loss of few jobs? Yes, having a more sustainable life will be costly and will hurt the people enjoying their current easy comfort, but it's time to realise this is not sustainable and the longer we wait to do something the harder it will be. What's your strategy? Who cares as the world is doomed, we'd better enjoy ourselves as much as we can? Hopefully not, because if our ancestors thought the same way, we wouldn't be here to think about it now...

George Robson   #9   05:26 pm Jan 28 2009

As this company already gets a huge discount on its energy and considering that all the profits from the smelter go offshore, I think New Zealand should tell the owners goodbye and good riddence.

jono   #8   05:26 pm Jan 28 2009

Nice point Simon!

And Charlie, you're saying you don't understand how an aluminium smelter produces emissions? Try google there....

Anyway, the reality is that industry in general has had a free ride with regard to environmental impact for a very long time. At some point they have to pay for the damage they do. And if we're waiting for our competitors to tighten restrictions (ie. USA, China and Oz) until we do the same... well, uh, yeah, good luck on that one.

Arthur Barlow   #7   05:26 pm Jan 28 2009

Hmmmm, Simon sees a silver lining in mass unemployment in the south of the South Island. Such clear thinking! Silly me. Here I was seeing a disaster for the country as we forge in this lunatic climate change obsession to be the world's good guys in being one of the first in carbon taxing/trading whilst the world's worst polluters, eg China & the US to name two, sit back and laugh. China will gladly take the last of our industries off us and leave us broke and more of a backwater than we are now. Then we can be like some Pacific islands and rely solely on tourism and we can all be a nation of taxi drivers, waiters and lackeys for wealthy tourists. Some sense must reign and NZ stop pandering to Communist Green liberals and wait for all the world's major players to get on board the carbon schemes before acting. Otherwise we will be the fools rushing in where others fear to tread. Waltzing Matilda anyone?

Su   #6   05:26 pm Jan 28 2009

Rio Tinto has provided an instant solution to our electricity generation crisis - pull out of New Zealand !! When Rio Tinto's aluminimum smelter in Southland closes there will be 20 per cent more power for the rest of New Zealand !! That alone would be enough of a good reason for NZers to support the Government's the Emissions Trading Scheme ! The end of noxious emissions from the smelter would be another. I'm sure the region could find some other environmentally friendly use for the abandoned smelter that would create enough jobs to make up for the local losses. Or at worse the workers could be employed by all the other industries encouraged to expand because the power price would be able to stabalise. Hope Rio Tinto is not just calling our Bluff !!

David   #5   05:26 pm Jan 28 2009

It's the Green party's fault for pushing to implement an emmission trading scheme that impact our national economy, just silly lobbying really. I believe it should be protected from emission trading scheme.

Andrew Gardner   #4   05:26 pm Jan 28 2009

So let's see here.

The smelter gets power supplied to them at a heavily discounted fixed price.

Joe Average NZer is paying through the nose for their power.

The revenue retained in NZ from the smelter operation is very low.

Seems to me, the best thing for NZ overall would be for the smelter to be shutdown and the 900 workers paid a redundancy package by the smelter owners and/or Meridian.

THe smelter should also pay to clean up the pollution it has spread over the farms in the immediate vicinity so they can be re-used instead of lying vacant.


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