Tiwai set to cut more costs

COLLETTE DEVLIN
Last updated 05:00 04/12/2012

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Further cuts to costs are to be made at the cash-strapped Tiwai Pt aluminium smelter.

The cuts are on top of the $70 million announced in October.

New Zealand Aluminium Smelters this week confirmed it completed its plan to cut 100 jobs at the smelter, but it was still losing money and further cuts were expected.

NZAS general manager Ryan Cavanagh confirmed yesterday that in addition to Tiwai's planned $70m cut in capital expenditure, further cost-saving initiatives would be pursued next year.

Ongoing programmes to reduce costs would include a review of maintenance services during the first quarter of next year, Mr Cavanagh said.

NZAS continued to face increasingly difficult economic conditions. It would continue to try to work with "key suppliers and stakeholders to reduce costs and grow revenues." he said.

Up to 20 businesses in the Invercargill area are expected to be hit by the halt to spending on $70m of planned projects.

A spokesman for Pacific Aluminium, which is a business unit of Rio Tinto, said the Rio Tinto divestment process was continuing but NZAS would like a long-term future at the Tiwai Pt aluminium smelter.

"We have put in place a number of initiatives we hope will secure that future. However, we are still losing money. At the end of the day, a business cannot keep losing money."

As reported in The Southland Times on Saturday, NZAS completed its organisational restructure without any forced redundancies.

Some employees elected to take voluntary redundancy while other employees who wanted to continue working at the smelter were placed into other roles.

Engineering, Printing and Manufacturing Union Southland organiser Trevor Hobbs said all smelter workers should be concerned because several areas left untouched by redundancies could face cuts next time around.

He believed there was a real danger the smelter would close.

"If Tiwai management can't renegotiate its electricity contract and the Government continue to sit on their hands with the exchange rate, it's not looking bright," he said.

Meanwhile, Invercargill Mayor Tim Shadbolt said he received replies to almost all his letters sent to hundreds of government, community and industry leaders in October.

Mr Shadbolt had voiced his concerns about the smelter and urged the Government to take action.

In his letter, he said without proactive leadership from the Government, New Zealand's ability to host value-added industries and add value to its primary sector was coming to an end.

He also outlined the knock-on effect the closure of the smelter would have on Southland.

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Mr Shadbolt said he was disappointed because most of the replies were neutral.

"They were mostly a generic ‘thank you for your information' replies, he said.

He had received tidbits of information about the smelter in the letters but had to verify whether they were true, he said.

- © Fairfax NZ News

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