Government seeking advice on smelter's request for transmission relief

Prime Minister Jacinda Ardern, during a visit to the Tiwai Point Aluminium Smelter in December 2018. Photo / Getty Images

Rio Tinto has laid out a request to the Government on how it could help to cut its transmission costs, amid a strategic review of the future of the Tiwai Point aluminium smelter.

Representatives of the Australian mining giant met with Energy and Resources Minister Megan Woods last week, around a month after announcing the review which could see the smelter closed.

Woods' office has said she has met with smelter representatives multiple times this year, but last week's meeting is understood to be the first since the review and the first time Rio Tinto has put specific ideas for how the Government could help it cut its energy costs.

"We discussed a range of issues relating to the review. I have asked the smelter to put thoughts in writing and send it to me," Woods said in a statement.

"They have done so and we are considering that material and getting advice from officials."

Previously the Government has said it would not be providing financial assistance to the smelter and indicated it would not intervene in a review of transmission pricing being undertaken by the Electricity Authority.

While the draft proposal from the EA would see the smelter's transmission costs fall by millions of dollars a year in the future, the company has said the savings would be too little and too late.

The smelter has complained that the current transmission pricing methodology requires it to pay a large chunk of North Island upgrades which provide it with no benefit.

Stew Hamilton, general manager of New Zealand Aluminium Smelters, which is about 80 per cent owned by Rio Tinto, has said the company needs to save "tens of millions of dollars a year" on both its electricity and transmission costs.

A spokeswoman for Rio Tinto confirmed meetings had taken place with Woods.

"We do not want a subsidy from the Government," the spokeswoman said.

"What we want is a fair price for transmission going forward."

Treasury documents released under the Official Information Act showed that even before Rio Tinto announced the review, Meridian Energy had already made the smelter's owners a new offer for electricity.

A spokeswoman for Meridian confirmed this week that the offer included new concessions but declined to elaborate.

Meridian is the owner of the Manapōuri Power Station which was built to supply the smelter with electricity.

It also owns a number of other hydro stations in the lower South Island which makes it especially exposed to the closure of the smelter.

Rio Tinto has said its strategic review of the smelter is progressing as planned and it would provide an update at the end of the first quarter of 2020.