Meridian chief hopeful about Tiwai Point aluminium smelter staying operational

New Zealand's prime electricity generator and retailer Meridian said they want the Tiwai Point aluminium smelter to stay operational. At the company's annual general meeting held on October 28, in Christchurch, chief executive Mark Binns told shareholders that he could see how important the issue was among investors and so, he wants the smelter to stay active, “but not at any cost”.

The Tiwai Point aluminium smelter uses 12 per cent of New Zealand’s electricity and its future was tied to the entire sector's performance, Binns added.

Meridian has increased the prices it charges for providing electricity to the smelter, effective January 1, 2017. The power generator refreshed contract it negotiated last year with the smelter’s owners, Rio Tinto owned New Zealand Aluminium Smelters. The deal was a blend of the old price for 400 megawatts of supply and 172MW at a higher price. They also gained a right to cut the aluminium smelter's electricity demand to 400MW from April 30 with one year’s notice. Although the earlier contract still runs to 2030, NZAS has an annual option to close or partially close the facility by January 1, next year.



Binns said that though he sticks to his company's revised strategy he believes the smelter will stay operational at least for the foreseeable future. "However, the owners have to form their own views based on the reality of the world aluminium market and their view of the future,” he said. “The only thing we can manage is the energy price, which even with the 1 January increase will remain the cheapest electricity price to any New Zealand customer.”

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If Tiwai Point smelter owners took decision in favour of closure, the excess power in the lower South Island would flow north and the supply and demand side of the electricity markets would need to adjust to the “new normal”, added Binns.