News
Great news for Southland New Zealand Aluminium Smelters Limited (NZAS) and Meridian have today entered into a revised contract for 572MW until 2030, allowing the smelter’s three potlines to remain fully operational.
NZAS Chief Executive Gretta Stephens said this was good news for the NZAS workforce, Southland and New Zealand. “We have crossed a hurdle today and now have more certainty about our immediate future,” Ms Stephens said. “The agreement provides short-term security for the smelter and allows time for market fundamentals to improve.”
The contract has ongoing flexibility to maintain or reduce the load, or terminate the contract from 2018 based on market conditions. “While we’ve taken a positive step today, our combined electricity and transmission prices are still not internationally competitive,” Ms Stephens said. Out of all external costs, Ms Stephens said reform to transmission pricing had never been more important as NZAS’ delivered cost of electricity was one of the highest for an aluminium smelter outside of China.
Last year alone the smelter paid $64 million worth of transmission costs. “We believe those who benefit from the infrastructure they use should pay for it, which is not happening now.
According to the Electricity Authority’s options paper, NZAS pays more than $50 million every year for transmission infrastructure it receives no benefit from,” Ms Stephens said. “Worldwide demand for high-quality aluminium is increasing through automotive and electronics manufacturers.
If we can continue production at NZAS, we will be able to take advantage of this future market potential which is good news for Southland and good news for New Zealand.”