Tiwai Point aluminium smelter closure likely to hit fossil fuel plants in NZ

The closure of Tiwai Point aluminium smelter in New Zealand will have a far reaching impact on the economy. A recent report by the NZ Ministry for Business Innovation and Employment forcasted a rapid exit of several fossil fuel power plants from the country if the aluminium smelter finally closes its operations.

The dwindling coal and gas fired power plants at Huntly would shut down at the end of 2019 and the gas fired plant run in Stratford by Contact Energy would close even early, if Tiwai Point smelter went out of business.

The smelter going out of operations would so dampen the electricity consumption of the country that the total demand would not bounce back untill end of 2020s, the report added.



The Tiwai Point aluminium smelter consumes about 13 per cent (that is, one-seventh) of total electricity generated in New Zealand and holds the right to buy the same until 2030. However, a subclause in the contract allows it to exit in 2018, provided it gives a one-year notice, which means 2017 will likely be the crunch year.

The smelter could have opted for cutting back on its electricity purchase by 30 per cent, but that would have required the smelter to cut back on aluminium production, which would have made the economics of the plant even more difficult than they already were, opined industry watchers.

The future of Tiwai Point aluminium smelter is vital to Southland’s economy, where it contributes $525m annually and employs 800 workers directly.