Tiwai Point is Closing

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#2522525 14-Jul-2020 01:18

Scott3:

A Great Big Smelting Pot - By Richard Prosser

snip

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

The Clutha Waitaki project doesn't put Manapouri "on the grid" in a way where the power can be fully consumed.

Transpower estimated that cost to be $600m in 2017

https://www.beehive.govt.nz/sites/default/files/2017-12/Transpower.pdf

michelangelonz

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#2522575 14-Jul-2020 09:09

Giga Factory.

https://www.facebook.com/nzgigafactory

josephhinvest

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#2522578 14-Jul-2020 09:35

michelangelonz:
Giga Factory.

https://www.facebook.com/nzgigafactory

"Having this amount of renewable electricity available at such low prices is unique in the world. We have 1200-plus skilled people in Southland we could transition, and we have a deep-water port, roll-on, roll-off capability, and many raw materials used to make batteries next door in Australia.

"This is a once-in-a-generation opportunity that I believe will attract a top team to pull together a deal."

from Herald.

This sounds pretty intriguing IMHO!

Cheers,
Joseph

Mahon

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#2522621 14-Jul-2020 11:06

josephhinvest:
michelangelonz:

Giga Factory.

https://www.facebook.com/nzgigafactory

"Having this amount of renewable electricity available at such low prices is unique in the world. We have 1200-plus skilled people in Southland we could transition, and we have a deep-water port, roll-on, roll-off capability, and many raw materials used to make batteries next door in Australia.

"This is a once-in-a-generation opportunity that I believe will attract a top team to pull together a deal."

from Herald.

This sounds pretty intriguing IMHO!

Cheers,
Joseph

Sounds like an ideal place to put a aluminium smelter!

frankv

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#2522630 14-Jul-2020 11:26

josephhinvest:

"Having this amount of renewable electricity available at such low prices is unique in the world. We have 1200-plus skilled people in Southland we could transition, and we have a deep-water port, roll-on, roll-off capability, and many raw materials used to make batteries next door in Australia.

"This is a once-in-a-generation opportunity that I believe will attract a top team to pull together a deal."

I think that the solar panels would be uneconomic in Bluff, especially competing with cheap hydro power.

I suspect that the cost of transport of the raw materials to Bluff and then batteries to markets would make it less economic than putting a solar-powered Gigafactory in Australia, adjacent to the lithium mine.

Handle9

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#2522809 14-Jul-2020 15:43

josephhinvest:
michelangelonz:
Giga Factory.

https://www.facebook.com/nzgigafactory

"Having this amount of renewable electricity available at such low prices is unique in the world. We have 1200-plus skilled people in Southland we could transition, and we have a deep-water port, roll-on, roll-off capability, and many raw materials used to make batteries next door in Australia.

"This is a once-in-a-generation opportunity that I believe will attract a top team to pull together a deal."

from Herald.

This sounds pretty intriguing IMHO!

Cheers,
Joseph

If only the power was actually cheap

ockel

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#2522832 14-Jul-2020 16:01

josephhinvest:
michelangelonz:
Giga Factory.

https://www.facebook.com/nzgigafactory

"Having this amount of renewable electricity available at such low prices is unique in the world. We have 1200-plus skilled people in Southland we could transition, and we have a deep-water port, roll-on, roll-off capability, and many raw materials used to make batteries next door in Australia.

"This is a once-in-a-generation opportunity that I believe will attract a top team to pull together a deal."

from Herald.

This sounds pretty intriguing IMHO!

Cheers,
Joseph

Farcical when you realise the quantum of subsidies demanded for a Gigafactory.
It makes the subsidies sought by NZAS look like pocket change.

Nevada has more than USD2 billion of tax reduction and worker incentives attached (as an example)

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Sidestep

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#2522872 14-Jul-2020 17:09

Handle9:

If only the power was actually cheap

Yes - of course that's the problem.. the power isn't cheap by world standards - and the world is awash in cheap energy right now.

From Ultra Large Crude carriers floating out in the ocean, loaded and unable to sell their oil even at a loss, to vast Hydroelectric projects just giving away excess power, and Natural Gas being sold below it's production cost - energy of all sorts is really cheap. And it's not just C-19 that's made it so. It's been coming on for years now.

At the end of February when Rio released their 2019 Q4 earnings (transcript here:) Jakob Stausholm, the CFO, specifically made it clear that their assets both in New Zealand and Iceland were on the block due to 'structural power disadvantages'.

ISAL - the plant in Hafnarjordur, Iceland - is supplied with hydro-power by Icelandic national power company Landsvirkjun, which like Meridian supplying Tiwai point, is a government controlled utility, and both at a similar rate - around $US35/MWh. For aluminium production that's prohibitively expensive.

The fact is, loosing money, with their contract with Meridian Energy ending in August, Rio was clearly going to close the plant, which must have been known by, and should have been planned for by Meridian.

Tracer

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#2523674 15-Jul-2020 18:24

Sidestep:

The fact is, loosing money, with their contract with Meridian Energy ending in August, Rio was clearly going to close the plant, which must have been known by, and should have been planned for by Meridian.

The contract didn't end, it has an early termination clause with 12 months notice which has been exercised.

JimmyH

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#2523753 15-Jul-2020 20:44

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

A Great Big Smelting Pot - By Richard Prosser

[Wall of text....]

Irrespective of whether any or all of his wall of statements are true, all of his points are essentially irrelevant.

It doesn't matter what the history of the contracts back in the dim dusty past is, why Manapouri was originally built, whether Tiwai makes amazingly pure aluminium, or whether it's used in the wings of an nifty aircraft. All that matters is whether, in a commercial negotiation Meridian and Rio Tinto can reach a deal. Meridian has presumably done the sums about what it will cost to transmit the power elsewhere in NZ etc, and has a price below which it would prefer to sell elsewhere. Rio Tinto has presumably done the sums and knows the maximum it can pay for power if the smelter is to remain an economic proposition. Both parties have to, by law, act in the interests of their shareholders. There will be some posturing along the way, but ultimately if the former is greater than the latter then a deal won't be reached, if it is then one will be.

There are plenty of armchair strategists (just read the comments on Stuff articles) who think they are experts in what Meridian, Rio Tinto and the Government ought to do, or be "made" to do.. But all three parties have capable expert advisers and will have worked this through and modelled it all, with far more rigour than any Stuff journalist or armchair commentator is capable of. It comes down to simple commercial reality - does Meridian think it can do better selling the power elsewhere than Rio Tinto is prepared to pay. Rio Tinto saying it will close the Smelter indicates that Meridian thinks they can. The Government not intervening is almost certainly on the basis of expert Treasury advice.

frankv

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#2523985 16-Jul-2020 10:38

JimmyH:

It comes down to simple commercial reality - does Meridian think it can do better selling the power elsewhere than Rio Tinto is prepared to pay. Rio Tinto saying it will close the Smelter indicates that Meridian thinks they can. The Government not intervening is almost certainly on the basis of expert Treasury advice.

I don't think it's quite that black and white. Assuming our minimum power sell price is below their maximum power buy price, we want to sell at their maximum rather than our minimum. They of course want to buy at our minimum sell price. So there's a whole lot of posturing and bluffing by both sides to get the best deal possible. And the Government may choose to subsidise the smelter (as it did last time) to keep Southland jobs, in the expectation that they'll recoup their money through continued income tax take and no increase in dole payments. No doubt Rio Tinto is happy about the media blitz about the cost to Southland of closing the smelter, and helped the media with information about the worst case scenario.

KrazyKid

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#2526075 20-Jul-2020 15:55

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

old3eyes

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#2526089 20-Jul-2020 16:14

KrazyKid:

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

Looking at the news this morning Marsden Point refinery isn't far behind in the closure que.

Regards,

Old3eyes

elpenguino

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#2526095 20-Jul-2020 16:34

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.

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

wellygary

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#2526111 20-Jul-2020 17:03

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.

Tiwai and the Australian smelters ( along with the bauxite and alumina facilities) have been up for sale since 2011, there have been no takers...

The next option is to close the business down,

There is huge over capacity in Al production at the moment, after 10 years of new smelters being built with state assistance in China driving prices down....

https://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=TAD/TC(2018)5/FINAL&docLanguage=En

There is no strategic reason for Rio to operate loss making smelters, those in Australia will likely also shut, unless the OZ govt rides to their rescue.

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