10 Apr 2018

Tiwai Point smelter looking secure

1:52 pm on 10 April 2018

The future of the Tiwai Point aluminium smelter is looking secure despite trade wars, United States tariffs, arguments over power costs, and a for sale sign still hanging around.

Tiwai Point aluminium Smelter

Tiwai Point aluminium Smelter Photo: PHOTO NZ

Chief executive Gretta Stephens said the smelter's outlook had improved since it settled its power supply issues and global demand and prices have increased.

"Hydro-powered aluminium such as ours with a low carbon footprint is the right way to make aluminium into the future, and when there's a levelised price on carbon I think you'll see smelters such as this really hit their straps," she told RNZ Business.

Ms Stephens is leaving the smelter in June to run the Glenbrook steel mill, south of Auckland.

She said the smelter had been through testing times in her four years but had survived because of the tenacity of the staff and Southland region.

Ms Stephens rejected the view that the company had been given corporate welfare in the form of cheap power prices and a $30-million grant from the then National government in 2013 after the company had talked about closing down.

The company consumes about 13 percent of the country's power supplies, but has long complained that it pays too much for power transmission, and warned that the plant's viability was at stake because of a high currency and depressed world prices.

It's hoping a review of transmission pricing by the Electricity Authority will result in a at least a $20m reduction in its power bill.

Ms Stephens said the smelter should not be affected by the U.S. government's 10 percent tariff on aluminium imports because it sells only a small amount there, but it might be affected if product was diverted into markets where New Zealand product was sold.

The Tiwai Point smelter produces high grade metal used in making cars and planes, which gives it some insulation against the swings in markets and demand.

The plant's owner, Rio Tinto, has been looking to sell Tiwai Point and other smelters for the best part of a decade but never found a buyer. Ms Stephens declined to comment on whether the sale process was still underway.

She said assuming the smelter was maintained and its technology kept up to date it could keep operating for decades.