A new electricity deal has secured the future of the Tiwai Point aluminium smelter for the next few years.
Meridian Energy will continue to supply power to the Bluff plant, providing 572MW of electricity to the smelter under the revised contract, with New Zealand Aluminium Smelters (NZAS) able to reduce the load or terminate the deal altogether from 2018, depending on market conditions.
But it now has some partners, with Contact and Genesis sharing the load of supplying the country's biggest power user.
"We have crossed a hurdle today and now have more certainty about our immediate future," says NZAS chief executive Gretta Stephens.
"The agreement provides short-term security for the smelter and allows time for market fundamentals to improve."
It's a deal welcomed by Invercargill businesses, but Mayor Tim Shadbolt accepts the region needs to expand beyond aluminium and dairy.
"I know we're a versatile people and we'll diversify our economy, but it takes time," he says. "And what this arrangement gives us is time, the most valuable commodity of all."
NZAS is majority owned by Pacific Aluminium, which in turn is owned by multinational Rio Tinto. The smelter uses 13 percent of the country's electricity.
Prime Minister John Key and Mr Shadbolt this morning said they were confident the smelter wouldn't close.
"The reason I'm hopeful is clearly the Government put in some money a while ago to try and ease things through."
The Government gave $30 million to Pacific Aluminium in 2013 to keep it open, just months before owner Rio Tinto posted a $3.7 billion profit.
Mr Shadbolt said above all, Southlanders were looking for certainty.
"Nothing's certain forever of course, but you know, if they're going to give us the old [Joseph] Parker punch and knock us out, we'd rather have it sooner than later."
The cost of cleaning up the land could also have been a factor in Rio Tinto's decision to keep the smelter open – estimated at $400 million.
Mr Shadbolt says there is little chance Rio Tinto would have tried to skimp on the clean-up.
"I spoke to Bill English at length over this issue, as to whether or not that guarantee was definitely locked in, and he said they are always building all around the world on major projects. If the word got around that they reneged on a deal, they wouldn't get anywhere. It would make future developments for that company very difficult indeed.
"So I think they'll stick by their word, and that could take years, that restoration project itself. It gives us time to develop, diversify, look at other options – and there's quite a few around."
A falling New Zealand dollar has helped improve the smelter's balance sheet, but the company says combined prices for electricity and transmission still are not internationally competitive.
Proposed changes by the Electricity Authority for use of the national grid could save the smelter $50 million a year – more fuel for the smelter's long-term future.
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