Meridian's offer to smelter still on the table, but expects closure in 2021

The Tiwai Point aluminium smelter in Southland could close in August 2021, although its electricity provider has made an offer which could delay closure. Photo / Nick Unkovich

New Zealand's largest electricity generator says it still expected the Tiwai Point aluminium smelter to close down in 2021, but confirmed a fresh offer to delay remains on the table.

In early July Rio Tinto announced that it had given notice to terminate its electricity contract with Meridian, owners of the Manapouri Power Station, and that it was planning to shut the smelter in August 2021.

While both the Government and Meridian pointed to the finality of the decision, analysts have speculated that constraints in the transmission network, which could force Meridian and Contact Energy to have to spill water from South Island hydro stations for several years, could set conditions for the closure to be delayed for several years.

Last week the Herald reported that Rio Tinto's global head of aluminium had told staff that a final decision on the future of the smelter would be announced in the next four to six weeks.

Meridian said on Monday morning that it had "no knowledge in relation to any such announcement". However it did suggest that an offer it had put to New Zealand Aluminium Smelters, remained on the table.

"Meridian has put a confidential proposal to NZAS with the objective of allowing NZAS to close down the smelter over a longer period of time - Meridian has proposed up to four years," the company told the NZX.

"To date that proposal has not been accepted and Meridian's current expectation is that the smelter will close on 31 August 2021 as previously announced by NZAS."

This week New Zealand's major electricity companies begin reporting financial results, with the prospect of the smelter, New Zealand's largest user of electricity, likely to overshadow recent financial performance.