Tiwai Point Smelter’s future to decide Meridian Energy’s fate

Meridian Energy says, in the possible scenario of Rio Tinto not renewing their contract post July 1 next year, they will watch for the closures of fossil-fuel powered stations before making a decision about their response. Rio Tinto is the major owner of the Tiwai Point Aluminium smelter.

According to Mark Binns, the chief executive of Meridian, there are two threats to the growth of the company, one is the potential closure of the Tiwai Point smelter while the other is the review of the RET scheme initiated by the Australian federal government.

In the first annual meeting after being listed on the NZX a year ago, Binns told the congregation that in the event of a termination notice from new Zealand Aluminium Smelters after July 1, 2015 the company "will monitor the supply response from its thermal competitors very closely" because the project uses around one-seventh of the entire electricity generated in New Zealand.

However, Binns expresses optimism regarding the smelter’s future due to the lower New Zealand dollar and the improved pricing of aluminium. "The trading position of Tiwai Point appears to have improved and although forecasts are just that – forecasts – the metal forecasters we follow are predicting further increases in aluminium prices in 2015 based on supply and demand dynamics," says Binns.

The electricity contracts had varied in August last year but since then the aluminium prices have appreciated by 10.3 percent with a considerable increase in the regional delivery premiums as well.