Concern lingers for Tiwai Point aluminium smelter's future

Tiwai Point aluminium smelter near Bluff is one of the few big manufacturing businesses working through the lockdown.

That's because shutting it down properly takes weeks, and re-starting it takes months.

It's Southland's biggest employer, but the site's long-term future still hangs in the balance.

With a thousand staff and contractors working onsite and another 1300 jobs directly linked to the smelter, it contributes $400 million a year to the region's economy.

"There wouldn't be anyone in Invercargill or in Southland who doesn't know somebody directly or indirectly who would be affected. So that's a real wellbeing issue for our community," says Graham Budd, Great South chief executive.

The plant's continuing to operate 24/7 through the lockdown, but that hasn't changed the uncertainty for workers.

Multinational mining giant Rio Tinto is once again looking at closing part - or all - of the smelter. It's threatened that before. But this time, after reporting a loss here of $46 million, the signs were more ominous.

An international team was sent to Bluff last November to review exactly what would be involved in shutting the plant down.

"It's the first time that Rio Tinto has called a strategic review of the NZAS operating site and really it's looking at significantly changing the price of electricity for the site, or considering other options," says Stew Hamilton, New Zealand's Aluminium Smelter (NZAS) chief executive. 

Since then, the price of aluminium has slumped to a five-year low. 

Tiwai recently began a controlled shutdown of the smallest of its four potlines, redeploying affected staff. But closing the plant altogether would send shockwaves through Southland.

"My family are here, they work at the smelter, and I want them to continue working at the smelter," says Iki Talamahina, a worker at the smelter. 

Newshub spoke to the Talamahinas before the lockdown.

Patriarch Iki has worked at the smelter for 39 years, later joined by two sons and a son-in-law. Working under the threat of closure has been tough.

"It's sort of put a lot of people on edge," says Tim Talamahina.

"It's kind of a feeling of been there before. But this time around it's just a little bit different," says Clayton Talamahina.

Chris Thompson and daughter Jaimee are another family worried about their futures.

"It is quite tough, because you want to think on the positive side, but there's always a bit of doubt," says Chris.

"There's a lot of concern for people about should they sell their house now, will the prices drop, should they get a mortgage now in case the price of the house doesn't reflect what they've put into it," says Jaimee.

COVID-19 has thrown an extra spanner in the mix.

Rio Tinto says to put Tiwai's future beyond doubt, it needs to slash its electricity costs.

Tiwai uses 12 percent of the country's power and pays about 10 percent of New Zealand's transmission costs. But Rio Tinto argues its electricity comes via a dedicated 150-kilometre transmission line from Manapouri hydro station, which is just 3 percent of the transmission network.

A review by the Electricity Authority could cut more than $10m a year off the smelter's power bill, but not until 2024.

"For us, 2024 is too far away. We're struggling significantly now, and we need to have action sooner than that," Hamilton says.

Tiwai Point has tried to stay competitive in the global aluminium market by focusing on the top end. It's one of only two smelters in the world producing ultra-high purity aluminium, which goes into the likes of smartphones, TVs, and high-end electronics. 

But the higher price for its aluminium is still not enough to offset its power bill.

Six years ago, the Key Government gave Rio Tinto a $30m sweetener to stick around.

That's not on the table this time.

"Yeah, we don't want a handout, we don't want a subsidy. We just want a fair price for transmission," says Hamilton.

Rio Tinto's original deadline of the end of March has passed, but Southland's leaders don't think the company is bluffing.

"I don't believe it's a play at all. It's a very large multinational business fundamentally reviewing a part of their operations. So yes it's of concern to us," says Budd.

A concern that lingers waiting for a decision that affects not only livelihoods in Southland, but the entire country.