Chairman of New Zealand Aluminium says they pay one of the highest electricity charges

New Zealand Aluminium Smelters pays one of the highest electricity costs in the world, outside China, competing with the smelters of Eastern and Southern Europe, says Chairman Brian Cooper in a statement.

The statement made by Cooper comes in response to the fear expressed by the electricity companies who are apprehensive about the future of the company. Since the company uses one-sixth of the total electricity produced in New Zealand, in case of a plant shut down, the market would be flooded and all calculations and assumptions about the power companies’ economics will get disrupted severely.

Fears of the electricity companies are not misplaced as the Tiwai Point smelter did come terribly close to closure two years ago and was saved by a $30 million grant from the Government and electricity price concessions from Meridian Energy.

There rescue deal comes with an opt-out clause that allows the company to shut down in 2017 if they feel the need. In that case, they would have to serve notice on July of this year. The electricity companies are getting apprehensive as the date of decision comes closer.

Cooper says they have not yet reached a decision on the future of the plant but they are negotiating more viable electricity rates with Meridian that will allow them to continue operating at or above their current production.

He also mentions that besides the high electricity cost, the plant also pays high transmission charges which amounted to $64 million last year, cutting into the company’s earnings.

Although he did not give details about the plant’s economies, he says modest improvement in the aluminium prices in last half of 2014 coupled with a stronger New Zealand dollar has had a positive impact on the company’s revenue.