Smelter at risk as negotiation breaks down

19:20, Oct 07 2012

Workers at the Tiwai Point aluminium smelter were told today Meridian Energy had walked away from its electricity contract negotiations, a union boss said.

State electricity company Meridian  had been under pressure to renegotiate an electricity supply deal with the cash-strapped smelter, which uses 15 percent of the country’s electricity each year.

Rio Tinto, which owns the smelter, had said it could close if it could not secure a cheaper electricity contract with the state-owned supplier.

Engineering, Printing and Manufacturing Union Southland organiser Trevor Hobbs said he was told by smelter union members talks had been unsuccessful.

"I was informed management held a meeting at the smelter to tell workers Meridian had walked away from power talks," he said.

Meridian Energy spokeswoman Amy Lockyer said confidential negotiations were still continuing.


Tiwai management were tight lipped and referred media inquires to its Australian operation.

A statement from NZAS general manager Ryan Cavanagh, which was issued though Pacific Aluminium, says:

"NZAS is continuing to talk with all stakeholders. We are not prepared to talk about the specifics of any one in particular.

"‘NZAS will not comment on internal briefings other than to say we try to keep all our employees informed about the business."

Labour Economic Development spokesman David Cunliffe, who visited the smelter yesterday,  said management had not disclosed information about the talks to him.

"‘However, I have been told by very reputable sources talks had broken down. This makes the situation more serious," he said.

Invercargill MP Eric Roy said he had not spoken to Mr Cavanagh but he had heard rumours of talks failing, which he had passed on to State Owned Enterprises Minister Tony Ryall.

Mr Ryall said he could not comment on rumour and speculation.

"I’ve been advised that Meridian hasn’t walked away from discussions with Rio Tinto. This is a significant commercial matter and I would refer you to Meridian," he said.

Last month, Prime Minister John Key told Fairfax Media Meridian’s new contract with NZAS was "pretty rock solid for the next three years" and was a well- constructed contract from the Government’s point of view.

A source believed the smelter would now have no choice but to close.

"This is different to what workers have ever heard, this is for real. Workers need to know if the smelter will close, especially those with families. They need to know if they should look for new jobs."

The source also believed a document was being circulated that proved Meridian already had plans for the power NZAS would not be using.

Management at the cash-strapped smelter announced last month September  it would shed 100 staff by November. Of those, 35 had already gone through natural attrition.

The Southland Times