NZAS seeks govt. assurance to cover unforeseen costs for Mataura aluminium dross back to Tiwai Point

The New Zealand Government countered choking up more than $10 million to dispose of 10,000 tonnes of perilous waste from the banks of the Mataura River in Southland. However, the Rio Tinto owned Tiwai Point Aluminium Smelter Company said it will never demand money.

The freshly released documents exhibit that NZAS would only concur to store the Mataura river banks waste back at Tiwai Point if, only the New Zealand Government deliver a guarantee, or indemnity, to cover unforeseen costs, for example having to store it for longer than expected if it could not be exported easily.

In January 2021, Grant Robertson, Finance Minister said: "New Zealand Aluminium Smelters have advised that they are unwilling to agree to provide the storage services without an indemnity.”

"The total maximum value of the indemnity is unknown, however, the total exposure has the potential to exceed $10 million."

“But the financial risk was less than the risk the waste posed to Mataura”, Robertson added.

The govt. had been confronting the pressure for the rapid removal of the hazardous waste - a processed by-product of aluminium dross called ouvea premix, which is explosive when mixed with water.

The Treasury warned Robertson following the crop up of another risk: "The nature of the proposed deal [with the Crown meeting half the costs for processing the waste and assuming additional risk through the indemnity] may increase public and stakeholder expectation that the Crown will play a significant role in managing and funding the remediation of the Tiwai Point site".

“This risk could be managed by making clear the indemnity and the clean-up were entirely separate”, it said.

The country’s officials had already offered the aluminium smelter company a multi-million dollar proposal if it would in turn agree to spend about $300 million on the clean-up when it closes down the plant in 2024.

The Environment Ministry attempted to get out of having to offer an indemnity at all, but could not find anywhere else to store the Mataura river bank waste, which is being pulled back to Tiwai and stored in containers, then exported by Australian processing company Inalco.

Moreover, a further 10,000 tonnes or so of aluminium dross is also expected to be trucked back to Tiwai from other spots in Southland, where it has been scattered since the 1990s.

Finance Minister Robertson went ahead and approved the Mataura indemnity.

In 2003 and 2004, the two historical indemnities were signed for the Crown to pay unforeseen costs if dross buried at Tiwai Point had to be dug up and disposed of.

The Public Finance Act 1989 permit indemnities only where the finance minister thinks it is required or in the public interest.

As the new indemnity was worth it, Robertson said.

"The longer the material remains at the Mataura paper mill, the higher the risk of a pollution event occurring.”