PM defends $30m payout to Rio Tinto

Rio Tinto-owned Tiwai Point smelter in Southland uses 12 per cent of New Zealand's electricity production Picture / Grant Bradley

Prime Minister John Key has defended his Government's $30 million payout to the owners of the Tiwai Point aluminium smelter after the Greens and Labour said parent company Rio Tinto's US$3.7 billion profit showed the payment was unjustified.

As well as reporting the US$3.7 billion net profit the global mining giant announced a 15 per cent increase in dividends to shareholders.

In August last year, the New Zealand Government made a made a one-off payment of $NZ30 million to Rio Tinto - which threatened to close the Tiwai Point aluminium smelter if it didn't get a lower power price from Meridian Energy.

Given Rio Tinto's increased profit, "John Key should be asking for our money back," Green Party Co-leader Dr Russel Norman said.

Labour's state owned enterprises spokesman Clayton Cosgrove said the subsidy paid to Rio Tinto "has been shown up to be corporate welfare at its worst".

"Rio Tinto must be laughing all the way to the bank. It can pack up and leave Tiwai in 2016, minus any obligations and having pocketed millions in taxpayer cash."

Mr Key this morning defended the payment as "a modest step to ensure there was a smoother transition where we didn't either have a glut of electricity we couldn't use or the thousands and thousands of Southland jobs were put at risk.

"If Tiwai Point had closed straight away then hundreds and hundreds and hundreds of jobs would have disappeared and the Greens would have said the Government doesn't care about those workers and is turning their back on them so they really can't have it both ways."