• Richard Prosser

A Great Big Smelting Pot

Photo credit: Newsroom / Getty Images

Sometimes I think I've woken up and found myself transported into the movie Groundhog Day. The years and the decades roll by, and as they do, new generations of young journalists are hatched and raised, until they are big enough to crane their heads above the edge of the nest, seeing for the first time the things that the rest of us have already lived through, and still remember.

The Bluff aluminium smelter at Tiwai Point is one of them. Periodically - well actually, with monotonous regularity - this jewel in New Zealand's industrial crown comes to the attention of another new crop of naysayers, and with a predictability as reliable as clockwork, all the tired - and incorrect - old arguments against its continued existence are brought to the fore.

It happened again last week, on the heels of Rio Tinto, the vast faceless foreign multinational that owns the plant, once more musing about the economics of continuing to turn rainwater into profit, for New Zealand's absolute benefit, at the bottom of the South Island.

They do this every so often, usually in response to someone, who knoweth not mud from manure, making noises about how little the smelter pays for its electricity compared with the rest of New Zealand, and how much better off the nation would be if only the big greedy plant could just go away, or pay more for "our" power, and how terrible it is that we even have such a dirty polluting example of actual industry in Clean Green Outer Rower.

Yes, the smelter gets its power cheaper than anyone else, and yes, it uses more than anyone else. Yes, it consumes anything up to 15% of New Zealand's total generating capacity. But there is a great deal more to the situation, than first appears to the uninitiated.

For the benefit of this latest batch of eager young scribes, who very clearly haven't been instructed as to the actual factual history of aluminium smelting in New Zealand, here are a few relevant points for them to consider. I mean seriously, if they haven't even been taught enough, at school and journalist training camp, to know the basic truths about something that only began as recently as 1971, how can we possibly expect them to pass literary judgement on something as complex as the rest of New Zealand's history?

1. Manapouri and Tiwai were built because of each other, and neither one would exist were it not for that fact. Manapouri’s power was priced to make Tiwai viable before either of them were constructed. It has no relevance to the price of power anywhere else in NZ. Originally, ConZinc Rio Australia, the Aussie arm of the company who owns the Queensland mine where the bauxite ore is sourced, and the alumina processing plants where it is pre-refined, were going to build both the power station and the smelter. But when they pulled back on the power station project, the NZ Govt of the day stepped in, undertaking to build it instead, if ConZinc would agree to go ahead with the plant, which would be the sole consumer for the electricity generated. More fool to the idiots who sold this electricity-making colossus of an asset off - it has been freehold for more than a generation, and the coin that it earns could have stayed feeding into the national coffers.

2. Manapouri’s power can’t be connected to the rest of the country without at least half a billion being spent on upgrading the grid. Tiwai was chosen as the site for the smelter because of its close proximity to Manapouri, being a suitable power source, and to Bluff, being a suitable deep water port necessary for the loading and unloading of base and finished materials. The ultra-heavy-duty 220kV transmission lines that emanate from Manapouri connect directly to the smelter. They don't connect to the rest of the National Grid beyond the degree to which the City of Invercargill is connected to the grid, and Invercargill is only connected as much as a city of 50,000-odd needs to be.

3. New Zealand simply does not have enough electricity demand, to utilise Manapouri’s output in the absence of the smelter anyway. Closing the smelter would also dictate that several other power stations would have to close as well, if Manapouri’s power was to be used by other consumers instead. In addition, current and forecast growth in electricity demand in New Zealand is in Auckland. Transmission losses over the 1,300 kilometres between Manapouri and Auckland make that a no-brainer before anyone even starts thinking about taking it seriously. Auckland needs new power generation, but it needs to be supplied from as close to Auckland as possible.

4. Tiwai’s aluminium is by far the purest in the world. It is sought after and used by the Japanese electronics industry and European aircraft manufacturers amongst others. Tiwai is a strategic asset in that sense. Tiwai aluminium clocks north of 99.98% pure. The wing roots of the Airbus A-380 are made from it. Only one other plant in the world comes close, that being an Alcoa smelter in Tennessee. World aluminium production exceeds 60 million tonnes annually. Tiwai's high-purity output totals around 350,000 tonnes, or a bit over half of one percent of that. It is always going to sell, and it is always going to sell for good money.

5. Making highly pure aluminium requires lots of heat, which in turn demands lots of electricity, which has to be cheap in order to make it economic. If it isn’t New Zealand hydro power making pure aluminium, it will be Chinese coal. What does anyone really want here? Of some 250 aluminium smelters worldwide, Tiwai is rated as being in the top 10 where environmental credentials are concerned. Far from being a blot on the environmental landscape, Tiwai should be something that New Zealand screams about from the rooftops, in this brave new (if deluded and insane) world of carbon hysteria.

6. Manapouri and Tiwai allow New Zealand to turn rainfall in Fiordland into $1 billion of export receipts, every year. Where else are we going to get that $1 billion from?

7. NZ closing a hydro powered smelter, and then shutting down a few thermal power stations because it now has excess electricity = yay! less coal being burned! But the Chinese burning more coal to make aluminium instead, = boo, no saving in global coal use after all. But also boo, NZ is now $1 billion and 2000+ jobs poorer. Brilliant green economics, eh.

Some estimates put the total number of people who depend on Tiwai for work and income as high as 4,000; which is significant anywhere, very significant for New Zealand, and crucial for a province such as Southland.

Seriously, people who bitch about the price that Tiwai pays for “our” electricity really need to swot up on the facts of the matter. One can forgive naive young journos for not knowing what they haven't been told about. But the facts of history are what they are, and there is no excuse for the politicians of today to ignore them.

Richard Prosser

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