Tiwai Point is Closing

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#2521033 11-Jul-2020 11:07

Good news!

It seems like the economic stars are aligning to give NZ a gentle shove in the right direction, with the Marsden Point refinery potentially shutting down at one end of the country, and the Rio Tinto/Sumitomo smelter at the other.

Both are electricity hogging, CO2 belching relics of the 60's that should go away.. and if Huntly's last coal/gas units get knocked off in the process, so much the better.
A bit O/T but, as others have mentioned, I think there's potential for NZ to use this opportunity to permanently reduce emissions and jump feet-first into a Hydrogen economy.

The real problem with Tiwai point's smelting future isn't the cost of electricity to run it, but the fact it uses the Hall-Héroult process for it's potlines.
For over 100 years this process - invented in the 1880's - has been used to produce the majority of the world's aluminium.
An issue that's become more pressing with the effects of Global Warming, is during production the carbon anode's consumed, producing at minimum, several tons of CO2 - a Greenhouse Gas - per ton of Aluminium.

Rio Tinto Alcan - the world's biggest producer of Aluminium, and Alcoa/Arconic the world's eighth largest, have partnered with Apple in Elysis and have recently reached the commercialisation stage of a new inert-anode smelting technology.

A real breakthrough in Aluminium production that - with electricity supplied from renewables like Hydro - will massively reduce aluminium related CO2 emissions, the main byproduct is Oxygen, and the process's increased efficiency reduces the electricity input required per ton of metal.

For Rio, the success of their new production process appears to have prompted a review of their assets around the world. Tiwai's just one of their smelters listed to close.
Crucially their group have Patent control of the new process's proprietary anode and cathode materials, which - lasting more than 30 times longer than traditional components, and making production up to 20% more efficient - are likely to become the new world standard.

If they don't see the value in converting Tiwai point to the new process there probably is none.

Mahon

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#2521108 11-Jul-2020 14:08

wellygary:

Mahon:

Not disagreeing with you...but they are all 5 year projects. I think to keep smelting in the mean time is best for NZ and the people in the South especially with a recession looming.

That's where the government starts to become vulnerable...

its running round the country throwing money at pretty much anything that will provide jobs, Cultural Centres, rugby clubrooms , bike parks , indoor courts, etc https://www.ft.com/content/cdcd8a02-81b5-48f1-a4a5-60a93a6ffa1e

But then I guess Southland isn't somewhere NZ First are trying to get elected,

Makes so much more sense to give $10M to a bungy jumping company,

JimmyH

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#2521288 11-Jul-2020 21:28

MikeB4:

Meridian is the major supplier of energy to the smelter. Meridian is 51% owned by the NZ Government therefore by providing a greatly reduced price for the power the NZ taxpayer is in effect subsidising Rio Tinto a multi billion multinational corporation.

I'm not sure of the basis on which you claim that. Meridian were dealing with the Smelter on commercial terms. If you committed to take that much power on a take or pay contract (which I recall the Smelter contracts were), close to the generator with low transmission costs, then you too would probably get a pretty decent price. The fact that Meridian shares fell sharply when the smelter closure was announced is a pretty good sign that Meridian was making money on the deal.

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#2521292 11-Jul-2020 21:35

rb99:

Just nationalise it.

Why on earth should taxpayers invest in a loss making aluminium smelter? If Rio Tinto can't make it work financially, I doubt the NZ Government can.

We had enough of that sort of nonsense under Muldoon.

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#2521299 11-Jul-2020 22:29

JimmyH:

MikeB4:

Meridian is the major supplier of energy to the smelter. Meridian is 51% owned by the NZ Government therefore by providing a greatly reduced price for the power the NZ taxpayer is in effect subsidising Rio Tinto a multi billion multinational corporation.

I'm not sure of the basis on which you claim that. Meridian were dealing with the Smelter on commercial terms. If you committed to take that much power on a take or pay contract (which I recall the Smelter contracts were), close to the generator with low transmission costs, then you too would probably get a pretty decent price. The fact that Meridian shares fell sharply when the smelter closure was announced is a pretty good sign that Meridian was making money on the deal.

I don't know, by the same logic the government of New Zealand has accused the government of New Zealand of manipulating power prices.

SOEs are strange things.

ObidiahSlope

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#2521323 12-Jul-2020 05:29

Sidestep:

A bit O/T but, as others have mentioned, I think there's potential for NZ to use this opportunity to permanently reduce emissions and jump feet-first into a Hydrogen economy.

An informative post Sidestep thank you.

However Australian YouTube contributor John Cadogen in his Auto Expert channel runs a series called beer garden physics.

One of the topics is an examination of hydrogen's potential as a fuel. He seems to know what he is talking about and makes one cautious about hydrogen as a future fuel.

https://www.youtube.com/watch?v=qOntMxYA29U

Obsequious hypocrite

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#2521374 12-Jul-2020 09:58

ObidiahSlope:

However Australian YouTube contributor John Cadogen in his Auto Expert channel runs a series called beer garden physics.

One of the topics is an examination of hydrogen's potential as a fuel. He seems to know what he is talking about and makes one cautious about hydrogen as a future fuel.

Well I like some of John Cadogan's videos, but he's got a bee in his bonnet here – and mis-states some things, starting with saying 'hydrogen's not an energy carrier – it's a fuel because you pour it in your tank' ..

Of course normal old hydrocarbon fuels are also 'energy carriers'.. they're just carrying the energy of long-ago sunshine, trapped in chemical bonds, that we can conveniently oxidise into heat... and CO2.

He's also specifically knocking hydrogen powered cars and light transportation – easy to do as they've always presented a very marginal case.
I'd personally buy an EV over hydrogen powered car, and I have the option of either where I'm currently living.

Hydrogen does have attributes that make it shine for specific applications. Some of them were touched on in last year's Hydrogen Car thread here, along with the clear false economy of Australian lignite – H2 gasification.

One big H2 advantage is for very fast and large refueling – ie transferring large amounts of energy into things like industrial and construction machinery, heavy transport and trains.

Anyway all a bit O/T for this thread. Would be happy to discuss in a Hydrogen thread.

Daynger

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#2521404 12-Jul-2020 11:48

Mahon:

Makes so much more sense to give $10M to a bungy jumping company,

Not just any bungy jumping company, one owned by three multi millionares.

Handle9

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#2521547 12-Jul-2020 19:37

Mahon:

wellygary:

That's where the government starts to become vulnerable...

its running round the country throwing money at pretty much anything that will provide jobs, Cultural Centres, rugby clubrooms , bike parks , indoor courts, etc https://www.ft.com/content/cdcd8a02-81b5-48f1-a4a5-60a93a6ffa1e

But then I guess Southland isn't somewhere NZ First are trying to get elected,

Makes so much more sense to give $10M to a bungy jumping company,

Funnily enough it probably does. One company may have a future with government subsidies. The other definitely doesn't.

Handle9

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#2521554 12-Jul-2020 19:58

Sidestep:

ObidiahSlope:

However Australian YouTube contributor John Cadogen in his Auto Expert channel runs a series called beer garden physics.

One of the topics is an examination of hydrogen's potential as a fuel. He seems to know what he is talking about and makes one cautious about hydrogen as a future fuel.

Well I like some of John Cadogan's videos, but he's got a bee in his bonnet here – and mis-states some things, starting with saying 'hydrogen's not an energy carrier – it's a fuel because you pour it in your tank' ..

Of course normal old hydrocarbon fuels are also 'energy carriers'.. they're just carrying the energy of long-ago sunshine, trapped in chemical bonds, that we can conveniently oxidise into heat... and CO2.

He's also specifically knocking hydrogen powered cars and light transportation – easy to do as they've always presented a very marginal case.
I'd personally buy an EV over hydrogen powered car, and I have the option of either where I'm currently living.

Hydrogen does have attributes that make it shine for specific applications. Some of them were touched on in last year's Hydrogen Car thread here, along with the clear false economy of Australian lignite – H2 gasification.

One big H2 advantage is for very fast and large refueling – ie transferring large amounts of energy into things like industrial and construction machinery, heavy transport and trains.

Anyway all a bit O/T for this thread. Would be happy to discuss in a Hydrogen thread.

He's basing his whole argument on the current method of producing hydrogen from methane. This is a stupid as basing the argument against EVs on current fossil fuel generation. Neither EVs or hydrogen vehicles make any sense at all unless you have abundant renewable or nuclear generation.

One of the points of hydrogen is that it can be produced when solar or wind is abundant and stored (either as ammonia or compressed hydrogen).

There needs to be a mix of energy available, EVs won't be the answer for climate change, neither will hydrogen vehicles but they will all likely be part of the solution.

frankv

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#2521562 12-Jul-2020 20:07

Handle9:
frankv:
Yeah... it's a pity that 5 or even 10 years ago they didn't start the "Connect Manapouri to the South Island Grid" or the "Connect Manapouri to the HVDC link" projects. A definite lack of foresight there.

I guess you would have been happy to pay an extra 2c per kWh "just in case"?

This is a massive project and not something you build unless you actually need it.

We've been paying an extra 2c per kWh anyway, because that electricity isn't available.

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#2521571 12-Jul-2020 20:22

From another forum, an alternate view on the same topic:

A Great Big Smelting Pot - By Richard Prosser

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

url=https://nzmotorhome.co.nz/Forum/viewtopic.php?f=90&t=20979&sid=88f450f55c12ff10193efae4f04b6bc9

Handle9

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#2521581 12-Jul-2020 20:37

PhantomNVD: From another forum, an alternate view on the same topic:

A Great Big Smelting Pot - By Richard Prosser

url=https://nzmotorhome.co.nz/Forum/viewtopic.php?f=90&t=20979&sid=88f450f55c12ff10193efae4f04b6bc9

There is some truth in this but Richard Prosser should not ever be considered a credible source.

Unless it's a different person Prosser is the racist nutcase who used "Wogistan" in an islamophobic rant and most recently accused Jacinda Ardern of a deliberate "plandemic" at the behest of the global banking cartel. He's a nut bar of the highest order. I'm choosing not to link to his lunatic blog but some context is below.

http://www.stuff.co.nz/the-press/news/8372553/Richard-Prosser-after-Wogistan

Tracer

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#2522444 13-Jul-2020 19:05

Sidestep:

If they don't see the value in converting Tiwai point to the new process there probably is none.

Indeed. Why would you spend all that capital on a smelter hamstrung by high electricity prices when you can get cheap hydro power in Canada? Their Australian smelters are also in trouble.

We need major electricity industry reform to undo all the damage Bradford and co. did, so we don't have to pay expensive Huntly prices for cheaply produced hydro power (and I guarantee Meridian and Contact will play the game to ensure Huntly still gets dispatched if the smelter goes).

Scott3

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#2522517 13-Jul-2020 23:19

PhantomNVD: From another forum, an alternate view on the same topic:

A Great Big Smelting Pot - By Richard Prosser

snip

That article is weird. Significant text is dedicated to reaming out young journalists for poor understanding of the history and "facts" about the smelter, yet presents poor information itself.

1. Argues that Manapouri was built for the smelter, and that as such there is no relevance for between the price of power for the smelter. I disagree. The smelter does not own the power plant, and the smelter using that power absolutely has an opportunity cost, as it could be used elsewhere (with an appropriate transmission upgrade). As such the price is relevant.

2. Argues about $0.5b of transmission upgrades will be required to get the power onto the grid. The counter argument is that this spend is easily worthwhile. Transpower's web page puts the projects estimated cost at $100m https://www.transpower.co.nz/clutha-upper-waitaki-lines-project

3. Argues NZ doesn't have enough electricity demand - and would necessitate other power-plants close also. I don't see the latter as a bad thing. Would be nice to close outdated and inefficient thermal plants like the remaining Huntley coal / gas units, given the current climate situation.

Also argues: "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." - This statement show's extremely limited knowledge of electricity transmission. We can and do transmit electricity over long distances with tolerable losses. In 2012, combined transmission and distribution losses for the entire of the NZ grid stood at 6.93%. Other large hydro in the bottom half of the south island has shown that generation does not need to be near use.

4. Argues that Tawai's high purity products will always be in demand, cites aerospace applications like A380 wing routes, Says there will always be demand at a good price. - This may have a reasonable assumption in October 2019, but the time since has not been kind to the assumption. The final A380 is under construction, the areospace industry is moving to composites in a big way, and demand for new aircraft has slumped.

5. Argues aluminium will be made instead by coal fired power in china. - In the current climate production could just be reduced, but yes, having the smelter leave NZ most likely will result in dirtier power being used elsewhere.

6. Ask's where we are going to replace the $1b of export revenue. - Frankly the value of export revenue isn't that relevant. We could simply import $1b of stuff, then export it again... What is important is the money injected into the NZ economy in the form of wages and local spending. That number is on the smelters website as $418M. Still big, but not as impressive as $1b

7. Rehash of 5 & 6

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