Tiwai Point Secures Future with 20-Year Electricity Deal
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- Tiwai Point aluminium smelter secures future with 20-year electricity agreements.
- New electricity deals involve renewable sources, benefiting Southland’s economy.
- Rio Tinto to acquire Sumitomo’s shares in NZAS and Boyne Smelters Ltd.
New Zealand Aluminium Smelters (NZAS) has secured the future of the Tiwai Point aluminium smelter by signing 20-year electricity arrangements. These agreements ensure the smelter will continue competitively producing high-purity, low-carbon aluminium using renewable electricity from New Zealand’s South Island.
“This is an exciting new chapter, and we would like to thank everyone involved, including our new energy partners, our local Indigenous partners Ngāi Tahu, the Southland community, the New Zealand government and our NZAS workforce for their support in getting us here today.”
The agreements, involving electricity generators Meridian Energy, Contact Energy, and Mercury NZ, set pricing for 572 megawatts (MW) of electricity to meet the smelter’s full needs. They are expected to commence in July 2024 and run until at least 2044, pending regulatory approvals and other conditions.
Rio Tinto Aluminium Chief Executive Jérôme Pécresse said, “We are pleased the long-term future of the Tiwai Point smelter has been secured with these agreements, which were reached with a genuinely collaborative spirit between all parties. They give us confidence that our New Zealand workforce and assets can continue competitively producing the high purity, low-carbon aluminium needed for the global energy transition.”
Additionally, the new arrangements include demand response agreements with Meridian Energy and Contact Energy, allowing NZAS to reduce electricity consumption by up to 185MW during peak times. This ensures a stable electricity supply to New Zealand homes and businesses.
In a separate transaction, Rio Tinto has agreed to acquire Sumitomo Chemical Company Limited’s (SCC’s) 20.64% interest in NZAS. This acquisition will make NZAS wholly owned by Rio Tinto. Furthermore, Rio Tinto will acquire SCC’s 2.46% interest in Boyne Smelters Ltd (BSL) in Australia, increasing its stake in BSL to 61.85%. Both transactions are subject to regulatory approvals from New Zealand and Australia.
Invercargill City Mayor Nobby Clark commented, “It’s an absolutely outstanding result, having this model when it’s produced from the purest element in the world is great for the city. A 20-year deal gives a lot of certainty to an lot of people and it allows other industries to come in knowing that the TY deal is now sorted. So it’s a huge day for economic development in the south.”
NZAS significantly contributes to the Southland economy, injecting about NZ$400 million annually and accounting for 6.5% of the region’s GDP. The smelter employs around 1000 full-time-equivalent employees and contractors, with an additional 2200 people indirectly employed offsite.