Tiwai Point is Closing

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Handle9

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#2526113 20-Jul-2020 17:09

elpenguino:
KrazyKid:

Interesting read on newsroom today on why the smelter is closing and nothing will save it.

Winston's plan to buy the smelter out is lunacy or in his terms, backing of a losing horse.

From the article looks like Rio Tinto is pressuring power suppliers in Oz for even lower prices or they're going to quit there too.

It's pure populist politics. From that perspective there is logic to what he is proposing just not financial sense.

elpenguino

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#2526213 20-Jul-2020 20:23

Handle9:
elpenguino:

Winston's plan to buy the smelter out is lunacy or in his terms, backing of a losing horse.

From the article looks like Rio Tinto is pressuring power suppliers in Oz for even lower prices or they're going to quit there too.

It's pure populist politics. From that perspective there is logic to what he is proposing just not financial sense.

It's also not the outbreak of common sense Winston often claims to be overseeing either.

You're right, it's a signal to provincial voters.

Most of the posters in this thread are just like chimpanzees on MDMA, full of feelings of bonhomie, joy, and optimism. Fred99 8/4/21

debo

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#2526703 21-Jul-2020 18:56

So what is Rio Tinto going to do when China puts tariffs on Australian bauxite and they have closed all their ozzy and nz smelters? They are taking a big risk in the current trading climate that is going on between China and Australia.

JimmyH

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#2526769 21-Jul-2020 20:54

debo:

So what is Rio Tinto going to do when China puts tariffs on Australian bauxite and they have closed all their ozzy and nz smelters? They are taking a big risk in the current trading climate that is going on between China and Australia.

Why would China put tariffs on Australian bauxite? In general they need raw materials. Plus, it would be breaking trade treaties and leave them open to retaliation, when their economy increasingly depends on trade.

But, to answer your question, if China did this and it priced Aussie bauxite out of their market, and their were no other buyers, then presumably Rio Tinto would close/mothball the relevant mines. Just like they would do if anything else made them uneconomic.

Scott3

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#2526838 22-Jul-2020 00:02

debo:

So what is Rio Tinto going to do when China puts tariffs on Australian bauxite and they have closed all their ozzy and nz smelters? They are taking a big risk in the current trading climate that is going on between China and Australia.

They have a massive presence in Canada. Critically they some large hydro-power plants securing long term low cost power for their smelters their.

With the recent tech breakthrough, and need to upgrade smelters to take advantage in a time of low demand, it appears they are focusing their efforts towards there most attractive asserts, and cutting the rest loose (if they can't secure bailouts or super favorable terms to keep operating).

I get the understanding that the bauxite supply chain is tightly held, and this is one reason that anybody else taking over the NZ smelter is unattractive.

Given the worlds two largest (by far) bauxite mining companies (ALCOA & Rio Tinto) have a substantial presence in aussie, if there was a hefty tariff put on Bauxite from Aussie, it would likely force up the cost of Chinese Aluminium, raising the world price and making Rio Tinto's Canadian operations more profitable.

Rio Tinto would likely be happy to slow down it's mining operation (extending the mines lifespan's), while enjoying a higher price for finished product.

As another poster has said, china is more likely to put tariff's on finished goods than unprocessed raw materials (an exception would be where they have enough market dominance to cause pain to an entire sector like barley - I don't think this is the case with bauxite as the big players are vertically integrated).

Plus I don't think china would pick a fight with the bauxite producers given how much money they have spent subsidizing local smelters despite limited local bauxite production.

pvjones

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#2531028 29-Jul-2020 19:59

It was an interesting place to visit. Anyone with a heart pacemaker could not go on the tour - apparently because of very strong magnetic fields. The tour guide demonstrated this by letting a steel crowbar attach itself to a steel frame!

Scott3

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#2551632 28-Aug-2020 21:54

Smelter back in the news lots:

26 Aug:

https://www.stuff.co.nz/business/122562329/meridian-suggests-fresh-government-talks-on-smelter-under-way-as-it-contemplates-13b-writedown

27Aug:

https://www.stuff.co.nz/business/122578966/energy-minister-megan-woods-not-denying-fresh-talks-taking-place-with-smelter-owner

28 Aug:

https://www.stuff.co.nz/business/122593646/rio-tinto-confirms-it-is-continuing-to-seek-help-for-smelter-from-government

https://www.stuff.co.nz/southland-times/southland-top-stories/122595880/we-need-firm-govt-commitments---southland-mayoral-forum

https://www.rnz.co.nz/news/political/424712/national-promises-at-least-five-years-of-tiwai-pt-smelter

https://www.interest.co.nz/business/106786/national-commits-facilitating-negotiations-keep-aluminium-smelter-tiwai-point-open

Seems like there is a desire by all parties to kick the can down the word for another 3+ or so years with regards to the smelter closure.

Makes a lot of sense to do so, with the transmission project taking roughly 3 years, and no other way to get the power out of the deep south, the marginal cost of the power (incl transmission charges) during this period is near zero. And it makes a lot of sense for our country if we can move the inevitable job losses away from the economic shock of the Covid-19 pandemic. Rio Tinto will know this, and will drive an extremely hard bargain.

On the other hand, the deal will need to be real good for Rio Tinto. With limited demand for aircraft grade aluminum at the moment, I would guess they will be smelting and stockpiling for when the market turn's up (or of the auto industry goes to Aluminium in a big way).

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Clima

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#2551673 29-Aug-2020 01:07

We cannot use the power Tiwai is using because of transmission capacity to the rest of the country. It only has value if they use it. If Tiwai stops we have large redundancies which are expensive. In the limit it would be cheapest to supply at cost and keep everyone working!~

Mahon

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#2551930 29-Aug-2020 14:23

Clima:

We cannot use the power Tiwai is using because of transmission capacity to the rest of the country. It only has value if they use it. If Tiwai stops we have large redundancies which are expensive. In the limit it would be cheapest to supply at cost and keep everyone working!~

At least cost plus 10% as was originally promised.

tdgeek

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#2552016 29-Aug-2020 18:11

Do we need decades of subsidies? Nah. A 3 year plan that suits RioTinto works, we can setup transmission, works for us too. Adding transmission, reducing coal/gas top up, immigration re Covid has been high, its future proofing for us if we believe in Climate Change. There is a need to bolster employment down there, that can now be a 3 year plan, time to incentive employers to enter Southland.

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