Where’s the plan for Southland post-smelter?

Grant Robertson on the shutdown of Tiwai Point and loss of thousands of jobs – ‘too bad, move on’.

Jacinda Ardern on the shutdown:

While Tinto have just announced they will close their Tiwai Point aluminium smelter next year this was a well signalled possibility. The Government response (acceptance of the decision) suggested they were well aware this announcement was coming.

Grant Robertson said Government will support the people and economy of Southland:

The Government will support the Southland economy in the wake of multinational mining company Rio Tinto’s decision to follow through with its long signalled closure of the Tiwai Point aluminium smelter.

“This day has unfortunately been on the cards for some time now, but nevertheless the final decision is a blow to Southland and all those who work at the smelter,” Grant Robertson said.

Stuff: Invercargill Mayor Tim Shadbolt ‘absolutely shattered’ by news of Tiwai Aluminium Smelter closure

Labour list MP Liz Craig, who is based in Invercargill also said she was devastated by the closure news and said her thoughts were with the workers, families, and businesses affected.

Craig acknowledged it will have a huge impact on the Southland economy.

She spoke with prime minister Jacinda Ardern this morning about the impact this will have on Southland.

“I am pleased that [Finance Minister] Grant Robertson has already signalled the Government will support the Southland community in our transition, in areas such as agriculture, aquaculture and manufacturing.’’

Craig has invited Adern and Robertson to visit in Invercargill to discuss how the Government might help support those affected, grow local jobs, and create a sustainable Southland economy.

Ardern visited the smelter when they reopened a fourth potline in December 2018 – that was good news. Will she frobt up when the news is bad? So far she has left it to Robertson, who seems quite relaxed about.

Bernard Hickey: Newsroom: Why is Labour letting Tiwai Pt shut now?

Finance Minister Grant Robertson seemed much more philosophical and accepting of the news when he spoke a couple of hours later. It became clear that both the Government and Rio Tinto had called each others’ bluffs, leaving Southlanders incredulous.

“This is a blow for the people of Southland and I feel for them, but we need to look to the future,” Robertson said.

“There is a certain sense of inevitability about today’s announcement. Rio Tinto have been trying to sell Tiwai Point for about 10 years now,” he said.

The Government is spending $62b to cushion the impact of Covid-19 on the rest of the economy, including handing out over $12 billion to small to medium enterprises to keep often near-minimum wage jobs going for a few weeks.

But it appears unwilling to consider spending a few tens of millions to keep at least 2,600 highly paid jobs going in a region with few other alternatives for such high-wage jobs.

Robertson talked airily on Thursday about the prospects for agriculture and aquaculture, but in reality those jobs will be much lower wage and have yet to be invented.

He has talked repeatedly about his personal desire to avoid the mistakes made during the 1990-91 recession when manufacturing jobs were gutted in the regions and little was done to soften the blow.

The risk for the Government and those remaining high-wage jobs in the regions in the next three months is that the announcement of closures of Tiwai Point (2,600 jobs), Marsden Point (3,500 jobs) and the Glenbrook Steel Mill (3,900 jobs) could potentially all come in the next six months.

The worst recession since 1990-91 could easily be just as damaging for the regions as that one.

So far the Government response has basically been ‘too bad, move on’.

ODT editorial: Post-smelter plan must be readied

Southland does not need woolly promises of help and platitudinous pep talks. It needs a concrete plan to meet and then beat the economic and social destruction left when New Zealand Aluminium Smelters’ closes Tiwai Point.

The looming costs are hinted at in the figures most often pitched as reasons to move heaven and earth to keep the smelter online. Previous estimates suggest it accounts for more than 6% of the region’s GDP, and well over $400million to the region’s economy.

That cash keeps people in work and businesses in profit. It helps people pay their mortgages and their grocery bills, helps them support local schools and pay their sports club subscriptions, and keeps them working in and contributing to the South.

These people, families and communities do not have long to consider the effect of losing the smelter. NZAS will terminate its electricity contract with Meridian Energy in August 2021, when the wind-down is complete.

They have little time to decide what to do next and an uncertain time in which to do it. They need no reminding we face a prolonged pandemic-induced recession, and that finding good work and a strong income may be difficult.

But there has been plenty of time to prepare for the inevitability that Tiwai would be shut down.

There is little time to prepare for a post-smelter future but successive Governments have had the best part of a decade to ensure there was a plan to cope with, and then fill the gap left when Rio Tinto pulled the plug on its regionally and nationally significant operation at Tiwai Point.

Treasury, Ministry of Business, Innovation and Employment and Ministry of Social Development officials have had plenty of time, regardless of which parties were in Government, to forge all manner of strategies for a post-smelter future. They, and a succession of politicians, have had years to prepare for the inevitable.

As such, Southlanders have every right to expect Prime Minister Jacinda Ardern and Finance Minister Grant Robertson to outline robust, detailed plans when they take up Labour Invercargill List MP Liz Craig’s invitation to visit Invercargill and ‘‘discuss how the Government might help us support those affected, grow local jobs and create a sustainable future for the Southland economy’’.

If not, Southlanders have every right to feel let down by a multi-national company and by the governments that saw this coming.

Robertson seems untroubled by the problems faced by Southland.

What about Ardern? I can’t find any response from her on the shutdown announcement. Nothing since her good news PR money handout announcement on Thursday – NZ Herald: Government to bail out councils with $761m water services investment:

Prime Minister Jacinda Ardern has announced a $761 million investment to help councils upgrade “run down” water services across the country.

In a politically charged piece of symbolism, Ardern and Local Government Minister Nanaia Mahuta chose the site of the water bore found to be the source of the fatal Havelock North campylobacter outbreak in 2016 to make the announcement on Wednesday.

“Investing in water infrastructure is about investing in the health of New Zealanders.”

Southlanders are New Zealanders. They received very bad news this week. Ardern was nowhere to be seen.

 

Do both Rio Tinto and the Government want Tiwai smelter closed?

There is no doubt that if the aluminium smelter at Tiwai Point was closed it would have a massive negative impact on Invercargill and Southland. But owners Rio Tinto are considering shutting the smelter down.

And it’s possible the Government would be happy to let this happen. The Greens have never liked big industry, Labour may be able to use the large amount of power used by the smelter to be diverted into electrifying transport, and NZ First’s regional development handouts seem to be stacked northward.

Stuff: Rio Tinto ‘not bluffing’ about threat to shut Tiwai Point smelter

A Rio Tinto “closure team” will arrive at the Tiwai Point Aluminium Smelter near Bluff next week to assess what needs to be done if a decision is made to close the site.

NZAS chief executive Stew Hamilton confirmed members of the Rio Tinto closure team would travel to Tiwai next week and be at the smelter for four days.

The work would be ongoing in the coming months, he said.

The team would be tasked with commencing the detailed work needed to assess what was required to be done, should a decision be made for NZAS to close following the conclusion of Rio Tinto’s strategic review.

The closure review work would cover a range of issues which would need to be considered when preparing for a site closure, including regulatory matters and logistics and scheduling.

Last week, Hamilton said an update of the strategic review would be given in February or March.

Hamilton said the financial position of the smelter was serious, hence the option of closure.

“It’s the first time Rio Tinto has announced a strategic review for the site and that means they are actually going to formally go through the process of assessing all the options including curtailment and closure.”

It was “hard to know” how likely closure was, but it was one of the options, he said.

“We have been losing money for some time and we need to make a fundamental improvement in the financial status of the smelter.”

Options ranged from operating at the status quo, which would require cheaper power, to closure of the plant, he said.

Energy Minister Megan Woods  ruled out taxpayer help to keep the Bluff smelter open.

Thomas Coughlan (Stuff): MPs turn up the heat as Rio Tinto Tiwai Point closure consensus grows

There’s a barely perceptible consensus emerging within Parliament that Rio Tinto’s Tiwai Point aluminium smelter should close.

No-one wants to say it in public – what politician would want to stick their neck out for job losses? – but for their own reasons, politicians from most parties think the smelter’s days are numbered.

The reasons are complex. Some of a free-market persuasion see Tiwai as a business on life support, kept alive as a result of a sweetheart deal from Meridian Energy and propped up by a $30 million cash payment from the government in 2013.

Others say the smelter should close for environmental and social reasons.

It consumes 13 per cent of New Zealand’s entire electricity supply. Almost all of its electricity is sourced from a hydro dam in Lake Manapouri that was built for the purpose of supplying the smelter. This allows Tiwai to claim it produces the greenest aluminium in the world, but it also means that an enormous amount of clean hydro-energy is tied up supplying the smelter. Freeing up the 13 per cent capacity and feeding it into the grid would mean we could probably afford to reduce our reliance on the Huntly coal generator.

This coal-fired power plant is kept online to accommodate for peaking periods and dry seasons, when the hydro lakes that generate the majority of our electricity are stretched.

In fact, the strongest arguments for closing Tiwai aren’t actually about closing Tiwai at all – they’re about significantly reducing our reliance on Huntly.

But Manapouri and Huntly are a long way apart.

Someone, either the government or consumers, would also have to step up to pay the cost of getting the electricity from Manapouri to the rest of the country. It’s already hooked up to the national grid, but Treasury estimated in 2012 that an additional $200m will need to be invested to upgrade the lines.

That doesn’t sound much in the whole scheme of things.

But the cost to Southland would be huge.

Southland would be particularly hard hit. Nearly 1000 jobs would go and investors who bought shares in the power companies partially privatised by the previous government would be burnt badly.

Labour and Greens tried hard to burn the partial privatisation of the power companies, arguably reducing the value to the Government in the sales.

The biggest effect of closing the smelter would be on New Zealand’s emissions. Again according to Treasury, Huntly produces 20 per cent to 50 per cent of the generation sector’s total emissions – these would be slashed by closing the smelter.

Some would see that as a compelling reason to let Tiwai close. But:

Tiwai is itself a large emitter, but here’s the rub: it’s a much cleaner smelter than anyone else has got. Closing it would just mean a much dirtier smelter producing aluminium elsewhere. It’d make our emissions look good, but do little for climate change.

Similar claims were made with the oil and gas exploration ban – it could lead to importing more dirtier fossil fuels.

But New Zealand has to take a hit somewhere. We can’t keep saying our aluminium, like our agriculture, is dirty, but cleaner than everyone else’s.

he unforgiving truth is that extra generation will have to come from somewhere and 1000 jobs and $200m worth of power lines is a rather low cost for the “nuclear-free moment” this Government wants climate change to be.

But shutting Tiwai, oil and gas and downsizing dairy may just move the emissions problems to less clean and less efficient places in other countries.

There is another issue we need to face – if New Zealand wants to make a major change to electric transport, it needs more electricity. Or it needs our largest electricity user to shut down, freeing up a large amount of hydro energy.

And there’s another possible complication. Shutting the Huntly coal station, and moving to greater reliance on hydro electricity for transport, leaves us vulnerable to the weather.

Perhaps we can hope that climate change will make our rainfall more reliable, to keep the lakes and dams that power the country full.

Labour’s conflicting priorities with Tiwai

National are in a difficult position on Tiwai balancing then interests of employment in Southland, the electricity market and asset share sales.

Labour are also in a difficult position as they need to find a position that satifies their anti asset sales campaigning, anti foreign multinational investment, and employment.

In Stuff Labour’s financial spokesperson David Parker is reported as saying:

“The optimal solution is to walk away (from the smelter) and let New Zealand have lower power prices,”

After Labour’s campaigns for Government intervention in saving jobs at KiwiRail and Telecom this is a remarkable statement – the Tiwai smelter supports a workforce of about 3,000, and unlike Telecom employees most of them would have real difficulty finding alternative employment in Southland or New Zealand.

Radio New Zealand has reported David Shearer as saying that  “the Government should have stepped in earlier” and been “more hands on”.

He wasn’t clear whether that meant more hands on to walk away from the smelter and the jobs, or more hands on to do a subsidised deal with Rio Tinto on power.

So this leaves Labour in a conflicted and vague position.

Is their anti asset sales campaign more important to them than the Tiwai smelter and thousands of jobs?