New Zealand Aluminium Smelters keeping an open mind on re-opening fourth potline at Tiwai Point

NZAS is keeping an open mind on whether to re-open a fourth potline at Tiwai Point. Photo / NZME

New Zealand Aluminium Smelters (NZAS) is keeping an open mind on re-opening the fourth potline at its Tiwai Point plant in Southland.

The potline closed early in 2020 in response to the Covid-19 pandemic and has remained shut ever since.

NZAS chief executive and general manager Chris Blenkiron said NZAS was open to exploring its options.

Meridian Energy, which runs the nearby Manapōuri power scheme, is NZAS’ main power supplier.

Reopening line four would require an extra 50 megawatts (MW) of power, over and above the 572MW negotiated last month.

“We are open now to exploring another 50MW to run the full operation and to exploring options that might exist there,” Blenkiron said at a Meridian investor day presentation.

Tiwai, he said, had one of the lowest carbon emissions of any aluminium smelter around the world.

NZAS last month signed 20-year electricity arrangements with Meridian Energy, Contact Energy and Mercury NZ to set pricing for an aggregate of 572MW of electricity.

Meridian chief executive Neal Barclay said the deal with NZAS was “complex and time-consuming”.

“To conclude it in such a positive and constructive fashion is great, not only for the sector, but for the country as a whole,” he said.

“It does provide the sector with a lot of certainty and it will free up a lot of investment, particularly in the South Island, going forward, so it is exactly what we needed.”

Barclay noted that four years ago, NZAS was looking at closing the facility due to the cost of running it.

“What has changed is the value of the green energy required to power it, and I think there lies the opportunity for New Zealand.

“Global markets are starting to value the green premium and New Zealand is uniquely positioned to be able to deliver products that are backed by a green, renewable energy system.”

Neal Barclay of Meridian Energy.

Blenkiron said that on a global average, it takes 12 tonnes of carbon dioxide to make a tonne of aluminium, compared to just two tonnes at Tiwai.

He said the plant’s green credentials had tended to get lost over the last few years, when its future was up in the air.

“The position that Tiwai takes in the chain is something that is desperately sought after around the world to try and find ways to get the environmental profile of smelters down,” Blenkiron said.

When last month’s power supply deal was announced, Rio Tinto also said it had entered an agreement to acquire Sumitomo Chemical’s 20.64% interest in NZAS for an undisclosed sum, taking its holding to 100%.

NZAS contributes about $400 million to the Southland economy annually, or 6.5% of Southland’s GDP.

Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.