Winston Peters: The future of Tiwai is a matter of national interest

By Winston Peters

NZ Herald·

15 Jul, 2020 05:00 PM5 mins to read

Winston Peters says the closure of Tiwai would cost hundreds of millions of dollars to transmit this surplus electricity to consumers in the north. Photo / Gregor Richardson

Opinion

COMMENT

News that Rio Tinto has announced that it is planning to wind-down operations at the Tiwai Point Aluminium Smelter could not have a come at a worse time for the people
of Southland.

While it has been clear that Rio Tinto was never going to support Southlanders over the long haul, especially the workers who actually produce its world-class aluminium, and the businesses that survive off the back of its operations, we now have 2700 people who could lose their jobs.

They are victims of a corporation which, in my opinion, has no regard for local economies and communities.

Rio Tinto, a foreign multi-national company, has received hundreds of millions of dollars in direct and indirect government subsidies over the years. But still, this is not enough.

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It follows a pattern of behaviour in countries such as Iceland and Australia, where the taxpayers are squeezed dry to prop up a refinery, which then proceeds to be shut down.

The Tiwai announcement should come as no surprise; predators rarely feel empathy for their prey.

That said, there has been something very wrong with the relationship between the electricity generator and the smelter as Tom Campbell, a former general manager at the smelter back in the early 2000s, has argued.

In New Zealand, unlike elsewhere in Europe, Canada and Australia, Rio Tinto and
Meridian Energy have had an adversarial rather than collaborative relationship. That's how things snap, when one or the other party feels aggrieved that the other side won't give a little to receive a lot.

The Manapouri Power Station was built for the purpose of ensuring adequate electricity for the Tiwai Pt aluminium smelter. Photo / Kenny Rodger, file.

It also underscores the flawed models that drive such perverse outcomes from our energy sector. It is a market failure.

It is also, ultimately, self-defeating for both Rio Tinto and Meridian Energy. Rio Tinto loses one of its most efficient plants that globally produces the purest aluminium, 99.98 per cent pure. Meridian Energy has no alternative customer for the 600 megawatts of electricity that went to the smelter.

Then there are the hundreds of millions of dollars which will be required to, over a 10-year period, transmit this surplus energy northwards. All of this, based on past experience, will likely be passed on to long-suffering energy consumers.

Chronic short-termism characterises both sides of the argument, with the good people of Southland now squarely caught in the middle.

When even Steven Joyce – of Novopay, the South Canterbury Finance $1.4 billion blow-out, the Sky City sweetheart deal, and the $11 billion non-existent fiscal hole, infamy – makes a modicum of sense on this matter, it's fair to say the Government must take notice.

Southlanders are, after all, asking to stop an unfair levy - not a fresh subsidy - so something must be done.

The sun rising over the Tiwai Pt aluminium smelter viewed from Bluff. Photo / Mark Mitchell, file

We have 14 months to fix this, and fix it we will. Any government with New Zealand First in it, now and in the future, will ensure those jobs are not lost to Southlanders.

Instead of caving in and paying $30 million to a Rio Tinto subsidiary seven years ago, National should have called Rio Tinto's bluff and supported New Zealand First's idea of a worker/management buy-out - something I've been advocating since 2011.

Why? Because the real blunt commercial reality is that Rio Tinto has, in my view, nothing of value to sell. The real value for Rio Tinto is the goodwill implicit in the Holyoake Government's completion of the Manapouri Power Station in 1971 to supply it with electricity.

Additionally, any potential worker/management buy-out is not without leverage given the estimated $400 million worth of remediation Rio Tinto is up for as part of any exit strategy.

A buy-out would give those who have the most stake in the success of the smelter, the people of Southland, the opportunity to directly benefit from owning and managing it.

And on the issue of national interest, why would we continue to import junk aluminium, with sometimes a two-year guarantee or less, when New Zealand is producing the most pure, lowest emission, aluminium in the world. It makes no sense.

For how much longer must we go on failing to defend our national interests?

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Throwing in the towel is not an option from New Zealand First's perspective and let's be open to look at any innovative solution that can preserve one of the mainstays of the Southland economy.

It is not just Tiwai where New Zealand workers face uncertainty. It is no different up north, where the Marsden Pt refinery is also facing an uncertain future.

In a time of economic crisis, the New Zealand Government cannot save every business, but for Tiwai Aluminium Smelter, and Marsden Point Oil Refinery, we have some compelling reason to try.

• Winston Peters is the leader of New Zealand First.