The endangered Tiwai Point aluminum smelter will continue to operate until the end of December 2024, under a new deal just announced to the New Zealand Stock Exchange.
Mining conglomerate Rio Tinto announced last year that it was shutting down Tiwai due to high energy and transportation costs.
Meridian Energy said global mining giant Rio Tinto, which owns Tiwai, has accepted a new contract.
Meridian Energy chief executive Neal Barclay said it should provide more certainty for people in Southland.
He said he is still planning for the eventual exit of the smelter, but will now accelerate other opportunities.
Extending the life of the Tiwai smelter will help expand approximately 1,000 jobs in Southland. 1,600 others owe their income to procurement and the services required to run the plant.
Rio Tinto, which had offered to close the smelter by August this year, said the additional three-year operation would allow time for better planning after the smelter closes in 2024.
In a statement, he said he was giving Rio Tinto, Meridian, the government and Southland time to plan and providing certainty to staff.
Rio Tinto said the new deal with Meridian covers new electricity pricing making the smelter “economically viable and competitive over the next four years.”
NZ Aluminum Managing Director and Managing Director Stu Hamilton told RNZ Summer hours program that the workforce would remain largely intact.
“This means we have to keep running the operation at full production until 2024. This means we’re going to need most of our people for most of that time.
The negotiation process has been going on for 14 months with many stakeholders including Meridian and also local and national governments, he said.
When asked what had changed, he said it was a discussion of how to get a competitive price for energy that makes the smelter commercially viable.
“Through the discussions, we have now reached an agreement which means that we are convinced that the foundry is in a much better commercial space to embark on these four years of operation.”
He said they still had to look at transportation prices to make sure the foundry was safe from the ups and downs of the market.
There are no subsidies, it was a trade agreement.
He said the announcement was great news for Southland and the New Zealand economy as a whole, as it meant turning renewable hydropower into pure aluminum, generating significant revenue for the economy.
No certainty for workers at the end of the year
The Labor Party campaigned to keep the aluminum smelter open for another three to five years, during last year’s election campaign.
In December, government ministers visited Invercargill, but were unable to provide workers with any certainty.
Ngāi Tahu also entered the fray with Te Runaka o Awarua Upoku, Sir Tipene O’Regan, sending a letter to Rio Tinto last month calling on the mining giant to give a voice to local Maoris.
Sir Tipene said that when Rio Tinto finally left, iwi did not want to see the surplus energy supplied by the Manapōuri hydropower plant go to waste and had a vision for green hydrogen production in the future.
But first, the iwi was concerned with a managed exit so as not to cripple the region’s economy and ensure that Tiwai Point was properly sanitized once the foundry doors were closed.
At the time, Rio Tinto declined to comment, saying they did not want to conduct negotiations through the media.
Energy and Resources Minister Megan Woods said last month the government is doing everything it can to keep Rio Tinto operating the smelter for three or more years after it is scheduled to shut down in August 2021 .
The government was also determined to prevent a toxic wasteland from being left behind, she said.