Heather du Plessis-Allan: Tiwai Point - not a sexy subject, but I'm glad they're back

We got a rare bit of good economic news today hearing that Tiwai Point Aluminium Smelter is committed to staying here for at least another 20 years.  

Normally, I don't have a lot for time for Tiwai. And that’s largely because of how the owners have behaved in the past: threatening to leave, going cap in hand to the government, getting saved, then a few years later threatening to leave again... getting some assistance, then a few years later threatening to leave again.

Point of Order: Price of power looks likely to become an issue, now that the Tiwai Point smelter wants to keep operating

A shot in the arm for the province of Southland came this week with the news that the Tiwai Point aluminium smelter will not shut down in 2024 — and could have a long term future.

Since the global giant Rio Tinto renegotiated the last electricity contract, extending the life of the smelter for three years from 2021, the price of aluminium soared as high as $US3800 a tonne, and although it has retreated from those levels, it is still high at around $US2400.

And because the aluminium produced at Tiwai Point is among the purest in the world, it is not surprising that Rio Tinto, and its Japanese partner, Sumitomo, want to continue production.

Mike Hosking: Rio Tinto's relationship with Govt feels like a hostage negotiation

 I think we can all agree that Tiwai going nowhere is a good thing. But that’s not the real story - or at least it shouldn’t be.

Tiwai is a lesson in why this country in parts needs to get its act together.

The clue here is the balance of power - no pun intended.

Does Tiwai need Southland or New Zealand? No. Does Southland and/or New Zealand need Tiwai? Yes.

And in that is the clue as to why they’re not going anywhere.

Kerry McDonald: The Aluminium Smelter Saga - There Has Never Been an Electricity Subsidy

Independent studies show that the Tiwai Point Aluminium smelter is one of New Zealand’s most successful developments. The first (1971) study estimated a 10% real annual return to NZ in terms of net national economic benefit over the smelter’s life; and subsequent studies  estimated  increasingly higher returns. The studies all included the full economic cost of the electricity used. 

On the other hand Comalco and its two Japanese partners were the victims of unprincipled government actions, entirely outside the letter and intent of their agreements, to impose extraordinary increases in the smelter’s electricity prices.