Tiwai Point Eyed Up For Hydrogen Production

An Australian billionaire is looking at using the aluminium smelter site at Tiwai Point near Bluff for environmentally friendly hydrogen production.

The smelter is due to close in just over three years at a cost of 1000 jobs and $400 million sucked annually from the Southland economy.

Dr Andrew Forrest, who founded and chairs the world’s fourth-biggest iron ore producer, Fortescue Metals Group, has met with Southland councils and been in talks with government officials about fitting Tiwai Point into his ambitious global plans.

“The Southland region and its renewable energy potential makes it an exciting opportunity for development as a potential green hydrogen production and export hub,” chief executive officer Julie Shuttleworth said in a statement to RNZ.

Forrest clashed recently with the Australian federal government over his forecast of a rapid end in sight for coal-fired energy and steel production.

He led a big Fortescue team that visited 47 countries last year, including New Zealand.

“[Fortescue] is assessing opportunities for projects globally, including in New Zealand, to support potential green operations,” Shuttleworth said.

While the company signed up some renewable and green energy project deals on its tour, nothing regarding Tiwai Point was signed.

“We are pleased with our engagement with local stakeholders and government on the feasibility studies to date,” Shuttleworth said.

Payment to clean up
The government and smelter owner Rio Tinto are still locked in a months-long wrangle over a site clean-up expected to cost well more than $300m.

Documents released under the OIA to the NZ Herald last month, show the government offered to pay Rio Tinto multi-millions of dollars, if it would in turn spend about $300m on a clean-up.

But the multinational rejected the offer.

Officials had warned ministers that $300m might well be too little and the “Crown will be seen to have agreed a level of remediation below what is necessary”.

Officials even gave the suggested payment a name, the “Southland Transition bond” – and elsewhere described it as a “balloon payment” enabling Rio Tinto to leave Southland.

A fallback option suggested in 2020 was for the government to make an “upfront payment”, in return for Rio Tinto committing to “achieve legal minimum remediation standards”.

The documents show officials had expected, if the “balloon payment” was agreed, that the smelter would want to disguise it as more of the electricity transmission relief it has won in the past from the Crown, so that it would get a positive reputational spin out of it.

Councils meet Fortescue
Both Southland councils – Invercargill City and Environmental Southland – met with Fortescue representatives in October last year.

“Fortescue requested the meeting to brief us on their early thinking,” the regional council said.

The Ministry of Business, Innovation and Employment said, in a statement, it had interactions with Fortescue on the potential use of the smelter site or “available electricity” should Rio Tinto exit.

“Fortescue has expressed an interest in developing a green hydrogen project at the site.”

The discussions were to update agencies and ministers on where the project was at.

Fortescue said it was committed to empowering communities and safeguarding the environment.

It aims to make steel with hydrogen generated from renewable energy sources instead of from dirty coking coal, and plans to start building Australia’s first green steel plant powered by hydrogen this year as a trial.

But Dr Forrest’s prediction of the demise of Australia’s coal industry put him offside with Canberra, which is backing coal for decades to come.

Fortescue, worth $41 billion, sends most of its iron ore to China.

MBIE said Fortescue was one of several organisations that have discussed with the government potential projects at Tiwai Point to use “the electricity that the smelter uses if or when Rio Tinto ceases operations”.

The OIA documents show officials are not convinced the smelter will be shut.

Aluminium world prices have been on the up, and Rio Tinto secured a good deal on power from state-owned Meridian in January.

Negotiations have been fraught.

Officials advised ministers that Rio Tinto maintained that it regularly updated closure plans for all its smelters but “despite repeated requests, Rio Tinto has never provided any detailed information about its closure study [at Tiwai]”.

The government responded by suspending talks in March.

Ministers were told in February the best option was to keep talks suspended until New Zealand Aluminium Smelters has finished its closure study, which would not be until 2023.

“This approach puts the onus on Rio Tinto to satisfy the Crown’s information needs in return for the financial relief that it seeks,” a Treasury document said.

Officials were “very circumspect about the scope, quality and degree” to which the company’s closure study would help fill in gaps for the Crown, but “there is no downside for the Crown in waiting” for the closure study to end.

The next best option was to resume talks just before smelter was due to shut in late 2024, putting pressure on Rio Tinto to do a deal if it wanted to keep operating.

As for paying Rio Tinto to encourage it to clean-up – a proposal the company rejected in 2020 – the documents say “officials recommend that a similar approach be taken to other large industrials” that faced closing down.

Source: rnz.co.nz Republished by arrangement.
Phil Pennington, Reporter
@pjppenn [email protected]

Rio Tinto Donates $90K to Koha Kai

Rio Tinto is helping to foster Koha Kai’s aim of encouraging a life of purpose for people living with disabilities by donating $90,000 to the organisation as part of its COVID-19 relief package, a global programme to support communities as they respond and recover from COVID-19.

During the COVID-19 lockdown, Koha Kai cooked 400 meals each day for some of Southland’s most vulnerable people. Joining forces with community health and social service providers, Awarua Whānau Services and Ngā Kete Mātauranga Pounamu, the team focused on providing healthy food for kaumatua, the disabled community and solo parents, particularly in rural areas.

The funding from Rio Tinto, a 79.4 per cent shareholder in New Zealand’s Aluminium Smelter (NZAS), will go towards developing more teaching facilities for Koha Kai’s students, including new teaching spaces and eventually also a teaching cafe.

NZAS chief executive and general manager Stew Hamilton said, “Koha Kai has touched many lives during lockdown and we are proud to help that work to continue and grow.”

“This is an organisation that is constantly working on new initiatives to give their students the best opportunities to learn – a teaching café would be an excellent example of this. By developing new skills and feeding their community, the students at Koha Kai gain a strong sense of pride in their contribution,” he said.

Koha Kai Founder and CEO Janice Lee is very gratefulfor the support. “It’s a much-appreciated contribution which we will use to support our vocational and training programmes through 2021 and beyond. This money enables the plans we have for updating and expanding our teaching programmes into the community. We knew what we wanted to do and achieve but weren’t sure how or when that was going to happen. Now with this contribution we have certainty for our plan for this year,” she said.

Tiwai Safe Till December 2024, NZAS & Meridian Reach Agreement

Rio Tinto has reached an agreement on a new electricity agreement with Meridian Energy that allows New Zealand’s Aluminium Smelter (NZAS) to continue operating the Tiwai Point aluminium smelter until December 31, 2024. The extension provides certainty to employees, the local community and customers while providing more time for all stakeholders to plan for the future.

While discussions with the New Zealand government are progressing in relation to their commitment to address the smelter’s high transmission costs, a new agreement has been reached with Meridian Energy in relation to power prices, making the smelter economically viable and competitive over the next four years.

The extension also provides time for detailed closure studies to be completed and for NZAS to support the government and Southland community in planning for the future. Plans for eventual closure of the Tiwai Point smelter will include extensive stakeholder consultation, including within the Southland community and reflect the company’s robust closure and remediation standards.

Southland Mayoral Forum Chair and Gore District Council Mayor Tracy Hicks says Tiwai Pt Aluminium Smelter remaining open until 2024 is “great news” for the region.

“This morning’s announcement is great news for Southland, and most importantly for the people whose livelihoods depend on the smelter,” Mr Hicks said.

“I would however stress that this is an important step along the way to ensure Southland has a broad-based, sustainable future economically.

“What this extension does for Southland is that it gives us time – time to evaluate and develop the opportunities presenting themselves and to make sure the power generated at Manapouri stays in the southern region to generate jobs,” Mr Hicks said.

“Leaving no stone unturned to ensure there is exciting growth ahead for the province is my focus.”

Rio Tinto Aluminium chief executive Alf Barrios said “We are pleased to have reached an agreement with Meridian Energy that will enable the Tiwai Point smelter to continue producing some of the lowest carbon aluminium in the world.

This agreement improves Tiwai Point’s competitive position and secures the extension of operation to December 2024. It also provides Rio Tinto, the New Zealand government, Meridian, and the Southland community more time to plan for the future and importantly gives our hard-working team at Tiwai and our customers the certainty they deserve.”

The deal between Tiwai Point and Meridian Energy to keep the smelter open until the end of 2024 is good news for the staff, contractors and wider Southland community, MP for Invercargill Penny Simmonds says.

“Tiwai Point is an important part of Southland’s economy and it is vital to have this certainty for the next four years.

“This extra time creates an ideal opportunity to work through a transition to new options for Southland and the energy industry.

“There are a number of new opportunities being discussed around hydrogen, and this extension will create the space to do the business case and take the community along.

“National will be working proactively with interested parties to ensure this key industrial site continues to benefit the local and national economy for future years.”

In July 2020, Rio Tinto announced the conclusion of a strategic review of the smelter and a decision to wind down operations by August 2021 due to high energy and transmission costs.
NZAS is a joint venture between Rio Tinto (79.36%) and Sumitomo Chemical Company Limited (20.64%). It employs around 1000 people directly and creates a further 1600 indirect jobs in Southland.

Toxic Waste In Mataura Won’t Be Removed This Year

Hopes the thousands of tonnes of toxic waste stored in Mataura would be removed this year are now gone.

The Environment Court mediation between the Environmental Defence Society and the waste’s producer New Zealand Aluminium Smelters and their owner Rio Tinto continued this week.

The society had hoped the court action would expedite the removal of more than 8500 tonnes of ouvea premix, which releases deadly ammonia gas when wet.

But in a minute issued today Environment Court Judge Laurie Newhook said it would not be removed this year.

“The problems encountered in recent weeks are complex but not, in my current assessment, intractable,” the judge said.

“I am therefore hopeful for commencement soon of accelerated removal of ouvea premix from Mataura, for placing in containers suitable for safe and secure storage of the product pending its disposal overseas.

“As will be apparent, this will obviously not be concluded by Christmas as previously hoped.”

Environment Minister David Parker echoed similar sentiments in the house on Wednesday.

“Before Christmas it’s unlikely that anything further will be able to be resolved. It is a toxic site that has potential risks . . . whilst the situation is a cause for concern, I wouldn’t want to unduly alarm people,” Parker said during question time.

Rio Tinto, the smelter’s owner, negotiated a deal in early 2018 with the government and local councils to clean up the waste over six years.

But this year the waste was threatened by flooding and fire, adding urgency to need to remove it from Mataura’s disused papermill.

Taha Asia Pacific moved 10,00 tonnes of the waste – a waste by-product resulting from aluminium production at the Tiwai Point smelter – into the Southland town without permission and then went out of business.

Gore District Mayor, Tracy Hicks, said he was disappointed with today’s development and it would come as a blow to the community.

“We just want it gone and have wanted it gone for quite some time now,” Hicks said.

“We really thought we were going to get this over the line before Christmas so if that’s not going to happen I’m very disappointed. But I know it’s the source of quite a bit of focus within the Environment Court as we speak.”

Source: rnz.co.nz Republished by arrangement. 

Court Action Brings Hope to Mataura Residents of Toxic Waste Dispute Resolution

There is renewed hope Mataura may finally be freed of the burden of more than 10,000 tonnes of potentially toxic waste.

Court action taken by the Environmental Defence Society against the Tiwai Point aluminium smelter’s owners has those in the Southland town finally feeling optimistic.

The so-called ouvea premix – a waste by-product of aluminium production – was moved into the disused papermill in Mataura by a now defunct company without resource consent in 2015.

This year that waste – which releases deadly ammonia gas when it gets wet – has been threatened by flooding and fire, and the people of Mataura want it gone.

Sort Out the Dross action group spokesperson Cherie Chapman said the Environmental Defence Society’s court action brought hope to Mataura residents.

“The people of Mataura will be delighted to have that stuff out of there,” she said.

“It has been an ongoing stress for them for many years and we are really grateful for the Environmental Defence Society and for the government stepping in and actually putting pressure on to get that stuff out of near the river and out of their town because enough is enough.”

New Zealand Aluminium Smelters and Rio Tinto reached an agreement with local authorities and the government in March 2018 to move the waste from Mataura and other sites around Southland over six years.

The Environmental Defence Society (EDS) has sought a ruling from the Environment Court over who ultimately has legal responsibility for removing the ouvea premix from the mill.

When the court action got underway earlier this month, the EDS hoped to get the waste removed by this Christmas.

The judicial settlement conference in the Environment Court continued this week.

Alternate Environment Judge Laurie Newhook issued a minute after this week’s hearing, saying the parties are “strongly engaged in urgently speeding up the process”.

He set down two further conferences for this month.

Chapman said the people of Mataura deserve to be free of the threat of the waste once and for all, though she was concerned alternative sites might mean the burden was shifted on to other communities.

“I’m concerned … at their alternative sites, because it should be just going back to Tiwai. I think it’s outrageous that Rio Tinto don’t just make that offer given they’ve got their land out there.”

Gore District Mayor Tracy Hicks said the agreement reached in 2018 was the best deal that could be done at the time, but he was grateful for the efforts of the EDS to have it removed by the end of this year.

“This has been going on a long time and I’m hesitant to say we’re nearing the end, but I’d like to think that is the case and it’d be fantastic if that news does emerge and I’m sure the Mataura people will welcome that.”

Mataura Community Board chair Alan Taylor said he was also pleased to hear of the progress being made through the Environment Court.

“It is a huge relief for the community. There’s been an awful lot of words spoken about it and they’re still working through the process and … nobody wants it in their community, especially in a built-up community.”

The Ministry for the Environment last night could not confirm how much ouvea premix had been removed since the level 4 lockdown ended.

However, in July more than 8500 tonnes remained in the mill.

The case heads back to the Environment Court next week.

Source: rnz.co.nz Republished by arrangement.
Tim Brown Tim Brown, Otago-Southland Reporter
[email protected]

How Meridian, Fonterra and Tiwai Point’s Electricity are Linked

The dairy giant Fonterra is casting ambitious eyes at the electricity that is about to become available after the Tiwai Point aluminium smelter closes.

But it needs to get a big cut in the price it pays before a deal can be made.

Meridian Energy is keen on selling power to Fonterra but doesn’t want to get any less money than it currently gets from the smelter.

If a deal can be achieved, it is likely that the Clandeboye dairy factory in south Canterbury and the Edendale factory in Southland would switch from burning coal to using electricity.

This possibility has arisen after Rio Tinto announced plans to shut down its aluminium smelter near Bluff after almost 50 years in business.

That would free up one seventh of New Zealand’s electricity consumption and make it available for the rest of New Zealand.

The trouble is, the transmission system is not strong enough to bring all of that power North.

That would leave a significant chunk of electricity stranded after a Tiwai shutdown.

Fonterra is desperate to get out of burning coal, which it concedes has a higher greenhouse gas component than natural gas.

Fonterra’s use of coal also attracts criticism.

But dairy factories use huge amounts of energy.

There is no reticulated gas in the South Island and most electricity prices are way too high to be economic, except for a few experiments on the fringes of the dairy industry.

And so, reluctantly, Fonterra burns coal.

But a far cheaper price for electricity, bought in bulk using economies of scale might provide an alternative.

Both companies began talking about this even before the smelter announced its closure – even exchanging staff to work in each other’s offices – and interest has intensified since the closure was announced.

It is understood the two factories would plan to use about 1500 gigawatt hours of electricity per year.

That is about third of the smelter’s take – and is equivalent to the amount of electricity that would necessarily go to waste after the smelter closes and before transmission lines are upgraded to take the power North.

Meridian’s chief executive Neal Barclay has publicly stated his desire to find an alternative buyer for Tiwai’s power, and has cited Fonterra as a desired partner.

Meridian chief executive Neal Barclay. Photo: Supplied

His worry is driven by a big financial fall off from a Tiwai closure – estimated by Forsyth Barr at a $50 million loss in earnings each year.

To stave this off, Meridian wants an alternative customer waiting in the wings to snap up that electricity when the smelter closes.

The pricing situation

But it is determined to get a similar price from Fonterra that it gets from the smelter.

Fonterra wants to get a much cheaper price than the smelter pays, possibly a third to a half less.

All these prices are commercially confidential.

But a small sector of the smelter’s take up has been publicly revealed at 5.5 cents a kilowatt hour, excluding connection costs.

The rest of its usage is thought likely to be at a similar price.

Bulk electricity contracts for large industrial users in the far South are currently 8.0 to 8.5 cents a kilowatt hour.

Fonterra would need to get electricity at one third of the going rate to balance its books.

So that would bring its electricity price to less than 3 cents a kilowatt hour – by far the cheapest power in the country.

It is understood a price at this level might have kept the smelter in business.

At this stage there appears to be a stand off.

Fonterra wants to get a much cheaper price for power than the smelter pays. Photo: Photo / AFP

Meridian hopes Fonterra will blink, and raise its offer to improve its public relations and avert rising costs of greenhouse gas credits bought on the carbon market.

Fonterra hopes Meridian will blink, and realise some money is better than none at all.

Wild cards

There are some wild cards in this game.

One is that Meridian has gone back to the smelter, with offers of a lower price for electricity.

It is not clear what the smelter will do about this, or how low that offer is.

Another complication is that politicians have got involved, desperate to keep a bad story out of the headlines if possible.

But this is expected at best to delay the Tiwai execution by a year or two, not produce an acquittal.

An extra possibility is that a big electricity user, such as a data processor, could be built in Invercargill to use surplus electricity.

A fourth possibility is that Transpower could make a huge effort and spend hundreds of millions of dollars to build new wires to get Meridian’s spare electricity North to the rest of New Zealand.

But that process might not be successful, or might be delayed.

At this stage, all parties to this dispute are working on multiple scenarios until the situation becomes clearer.

Source rnz.co.nz Republished by arrangement.

Prospects Slim For Tiwai Point Aluminium Smelter Workers Set To Lose Jobs

Southland industries are warning new jobs for smelter workers affected by their employer closing shop won’t be available overnight.

One of the region’s major employers the Tiwai Point aluminium smelter is closing – 1000 people will lose their jobs, and a further 1600 workers in the supply chains will also be hit hard.

Finance Minister Grant Robertson is promising to help the workers find new jobs in agriculture, aquaculture and manufacturing in the region.

The smelter was being subsidised by taxpayers, he told Morning Report.

“In terms of the subsidies we give, the biggest one is around emissions trading scheme credits and that amounts to about $48m for the smelter. In addition, we’ve just done the transmission pricing review which would have seen another $10m saved off the power bill. It’s been a fairly generous provided power source.”

There would be no more money going to Rio Tinto, he said.

“We can’t force them to stay.”

Bluff Engineering and Welding director Andrew Watkins said jobs for people leaving the Tiwai Point smelter would be limited in his sector.

“Well, I believe that there will be a percentage [that] will be able to be absorbed into the current engineering industry in our area,” he said.

But he hinted at challenges due to the unfolding economic uncertainty.

“Given the current climate due to Covid, I think that we’ve seen a lot of skilled labour returning to this area. So those people will be taking up some of the jobs, we’ve been approached by several people recently looking for work who have returned.”

The aquaculture sector has also been touted as an option.

Sanford aquaculture manager Ted Culley said there are opportunities on the horizon at the seafood company, particularly around expanding its salmon-processing plant in Bluff.

“We’re looking to move our operation from 3800 tonnes as it was to 6000 tonnes. So right now, in September this year … we’ve got a brand new barge coming in from Hobart in Australia which is a $5.4 million investment,” he said.

But Culley said jobs did not come overnight, as the challenge with salmon was that it involved a three-year growth cycle from hatching the eggs to harvesting.

“In around four years’ time, we expect that we’re going to get some extra 40 jobs in our processing operations and also you know, the indirect jobs if you’re looking at the multiplier that most people use around indirect jobs, it’s three to one, so it’s another 120 jobs,” he said.

Bluff community board chairman Raymond Fife said as the economy improves he expected the highly-skilled workers would be in increasing demand.

“No doubt the smelter will be looking at those sorts of options to help the workers and no doubt that other businesses that have probably been struggling to get skilled people may have the opportunity to hire staff as well,” he said.

Meanwhile, Southlanders said there was confidence in the local economy and a lot of industries crying out for workers.

Rio Tinto said the Tiwai Point Smelter would be closed down by August next year, when the company ends its contract with Meridian Energy.

Contact Energy chief executive Mike Fuge said his company, Meridian Energy and the government had put a very good offer on the table to help Rio Tinto keep the smelter open.

He told Morning Report decreased demand for power in Southland could mean higher electricity prices elsewhere, because there wasn’t the infrastructure to move the electricity north.

Fuge said Rio Tinto should reconsider the move and that transmission pricing issues should have been resolved earlier.

“But there is a resolution on the table now,” though it wouldn’t come into effect for two or three years, Fuge said.

“The smelter, with the deal on the table is viable, its electricity is 100 percent renewable.”

“For Southland New Zealand [Rio Tinto] should be certainly reconsidering” – Contact Energy chief executive Mike Fuge duration5′ :22″ from Morning Report Add to playlist

“For Southland New Zealand [Rio Tinto] should be certainly reconsidering” – Contact Energy chief executive Mike Fuge
He said it was viable for the smelter to continue.

“It’s a combination of the transmission pricing and the pricing we put on the table and Rio’s strategic imperatives and their commitment to sustainability that needs to come together.”

This announcement brought instability to the market he said, which could last a number of years.

Diversifying the Southland economy

Southland regional development agency Great South chief executive Graham Budd told Morning Report there were plans for agriculture and hydrogen plants and overall diversification in the region.

“Many of them are in ‘the good idea’ stage,” Budd said.

“We want to fight this” – Great South chief executive Graham Budd
It was investment and promotion of opportunity for investment in Southland, he said.

“The smelter is … the single largest employer that represents about 6 percent of our GDP. There’s plenty of diversity in the rest of the economy across agriculture and tourism. We have other processing – dairy, wood.

“This smelter has been here for nearly 50 years so it has become a significant place not only economy but our community.”

He said the government should work to change Rio Tinto’s mind.

“We want to fight this till there is a last breath.

“The transmission pricing has been a sticking point of the power price overall the smelter pays.”

Source: rnz.co.nz Republished by arrangement

Smelter’s Owners Post A Loss For 2019

Rio Tinto’s wholly-owned subsidiary Pacific Aluminium (New Zealand) Limited has reported financial results relating to its interest in New Zealand’s Aluminium Smelter Limited (NZAS), showing an underlying net loss of NZ$46 million for 2019.

This is a NZ$68 million decrease in earnings from the previous year’s underlying net profit of NZ$22 million.

The loss is a result of consistently lower and volatile aluminium prices, coupled with uncompetitive energy prices. In 2019, aluminium prices were 15% lower than the previous year, averaging US$1,791 a tonne. While the New Zealand dollar was also lower, this was not enough to offset lower metal prices.

NZAS chief executive and general manager Stew Hamilton said “This result underscores why Rio Tinto is conducting a strategic review of our operation here at Tiwai.”

“No matter how hard or efficiently the team here works, we can’t consistently off-set the high price of power and transmission charges we face. This means we swing from delivering small profits to losses for our owners, making our financial viability uncertain.”

Powered by renewable hydro-electricity, NZAS is well placed to provide low carbon aluminium to meet growing demand for the lightweight metal in the automotive and other industries.

Mr Hamilton said “If we can secure an internationally competitive power arrangement that enables us to be consistently profitable and a transmission charge that more accurately reflects the service we receive, NZAS will be well placed to continue to be a vibrant part of the New Zealand economy, providing primary metal to local kiwi businesses and remaining a major export to Japan.”

“Our transmission costs are the highest of any smelter we are aware of in the world. Most
smelters, especially those located close to generation like NZAS, pay considerably less.

“We want to be part of this country’s low-carbon future and, by producing some of the lowestcarbon aluminium in the world, we believe we have vital role to play in that future.”
The strategic review announced by Rio Tinto in October last year is considering all options, including curtailment and closure, with an update expected in the first quarter in 2020.

Tiwai’s Fight For Fairness

Around 100 people attended the Southland Chamber of Commerce’s Fight for Fairness event in Invercargill on Thursday evening, aimed at showing the impact the aluminium smelter’s closure would have on the community.

The discussion was hosted by Fight for Fairness campaign organiser Carla Forbes, and attended by Rio Tinto external relations director Jen Nolan, Smelter chief executive Stew Hamilton, and Southland Chamber of Commerce Chairman, Neil McAra.

Even though only 100 people attended, the smelter’s closure at Tiwai Point would affect thousands of families across Southland.

The primary reason for Rio Tinto’s review of the smelter was its transmission costs. The company was paying between $60 million and $70 million and used around 12 percent of the country’s power. Their share of the transmission costs, they said, was not reflective of their use.

Smelter chief executive Stew Hamilton said their request was fair.

“Rio Tinto are not looking for a handout, but fair pricing on transmissions costs.”

Around 5,500 people had signed an online petition to keep the smelter open, but Rio Tinto is yet to come to a decision about its closure.

Sign the SAVE TIWAI, SAVE SOUTHLAND Petition HERE!

Watch the video of the meeting.