New Zealand PM Would Urge Aluminum Smelter to Remain in Service

October 1, 2020October 4th, 2020
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If re-elected, PM Ardern would seek to keep Aluminum supply flowing another 3-5 years

“[The smelter] consumes about 5,000 gigawatt hours of electricity a year, roughly 12% of the country’s power. The smelter employs around 1,000 people directly and creates another 1,600 indirect jobs in the Southland region.”

Reuters, 9/27/2020

Article Summary

  • Rio Tinto-owned New Zealand Aluminum Smelter (NZAS) is marked for closure by the company, citing costs and market forces.
  • NZAS represents a sizeable portion of the island-country’s electric load and is a major employer.
  • New Zealand’s elections are on October 17, although the PM’s comments suggest targeting Rio Tinto would happen in her potential next term. Her rival (Collins) has also promised talks between Rio Tinto and the power industry.

AEGIS View

While important to New Zealand’s power and jobs markets, the NZAS facility is a small piece of global supply.

A deal to keep NZAS open may hinge on negotiated power rates in New Zealand. However, Rio Tinto may also be eyeing a new set of economics, as LME Aluminum prices are near pre-Covid levels and are much better than this summer when Rio Tinto made its announcement.

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