Tiwai Point and Rio Tinto

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Linuxluver

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#115539 28-Mar-2013 21:11

So let me get this straight.

If Rio Tinto abandon the Tiwai Point smelter, EVERYONE ELSE gets cheaper power?

Shut the plant down!!!

It will save Kiwis billions....and show Rio Tinto their blackmail tactics don't work and aren't welcome.

Cheaper power will be a bigger spur to economic growth than any tax cuts....as the last two lots of tax cuts didn't do anything but make the trade deficit worse because we could pay for more imports.

But it looks like the government has a policy of maintaining inflated power prices.....so we ALL pay more.

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#788971 28-Mar-2013 21:18

The downside is if it closes then the economy of Invercargill/Bluff takes a hit

DarthKermit

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#788974 28-Mar-2013 21:24

IIRC, the smelter owners have paid about half of what the rest of us pay per kilowatt hour ever since that smelter opened.

I'd tell them where to stick it personally. They've had a very cheap ride off of NZ for decades.

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mattwnz

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#788976 28-Mar-2013 21:27

I wonder if a cost benefit plan has been prepared. Closing will mean a loss of 3000 jobs, which will be devastating on top of other job losses recently. But we can't give our power away just to sustain those jobs. It will be good in terms of future power generation, as we wouldn't have to build new plants. But new plants have been built because this plant was operating, so if it had closed earlier, we as a country may have saved billions in not having to build new generation.

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#788987 28-Mar-2013 21:32

cheaper power perhaps, but..... southland loses $500M from their economy (1/10th of their GDP), NZ loses $1B in exports, 3200 people lose their jobs (a bunch more too when all the other shops, pubs and restaurants affected close down), property prices plummet in southland, and social welfare costs increase by a few hundred million.

how much will you save off your monthly power bill after all this carnage? (and will you just end up paying it elsewhere as the govt increases taxes to pay for the increased social welfare and to cover the loss of tax income from the domestic and export earnings)

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JimmyH

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#788996 28-Mar-2013 21:44

They also have to get the power somewhere. As I understand it, the smelter is largely tied to Manapouri while most of the growth in power demand is North of the Bombay Hills. I sure hope the grid can cope?

Also, if Meridian lose money then ultimately so does the Government, and this has to be made up somehow. Fancy higher taxes or lower spending?

As an aside, I think the contracts are more complicated than just "cheap power", with Rio Tinto facing take-or-pay clauses for contracted volumes etc.

Skolink

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#789103 29-Mar-2013 09:13

Tiwai may only take power from Manapouri, if lake lelvels are low they have to reduce production. If the smelter closes then the aluminium will be smelted elsewhere on coal-fired power. Think of it as exporting clean power, and doing your bit for the environment.
Also, Manapouri was only built in the first place to supply Tiwai, it probably wouldn't exist if it weren't for the smelter.

We aught to be pushing ahead with project like the Waitaki North Bank Tunnel project and shutting down Huntly. Fat chance of that happening once the power companies are semi-privatised.

Delphinus

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#789202 29-Mar-2013 12:01

Related articles that are an interesting read:
http://lancewiggs.com/2013/03/28/stand-firm-meridian-on-tiwai-we-can-all-win-here/
http://todanz.blogspot.co.nz/2012/09/new-zealand-aluminium-smelter-ltd-do.html (New Zealand Aluminium Smelter Ltd do a Godfather; Nice smelter you got. Be a shame if something happened to it )

maslink

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#789407 29-Mar-2013 20:47

I definitely don't think that Meridian / the government should fold here - the owners of the smelter are in just as tough a position. At the very least the smelter represents a considerable investment ($100M?) and once it's closed the electricity will disappear into other areas of the economy (hopefully resulting in reduced power prices, but I won't hold my breath), making it very difficult to find another buyer in place, and they'd be lucky to get $0.10 on the $ for the plant alone. So they have a fair incentive to reach an agreement - however unpalatable it might be. We can be reasonably sure that their existing long term contract would be upheld in the courts, so there might be some hefty break costs if they do want to shut down.

And while I don't want to see it shut down ( given the effect on the Southland economy), if it did happen, my hope is that the reduction in power prices to domestic and industrial consumers through falls in the spot market prices would offset the damage, on a national level at least.

nickb800

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#789414 29-Mar-2013 21:14

Even if they were to shut down tomorrow, it would take years for the grid upgrades enabling all of Manapouri's power to be sent north - at present most of the power lines from Manapouri go straight to Invercargill.

If we as a society think that it is important to support the thousands of jobs directly and indirectly dependent on the smelter, then I'm sure that we can find a more efficient way to do that that doesn't involve a hidden tax on everyone's power bills and a massive subsidy to an international corporate

Linuxluver

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#789436 29-Mar-2013 21:38

mattwnz: I wonder if a cost benefit plan has been prepared. Closing will mean a loss of 3000 jobs, which will be devastating on top of other job losses recently. But we can't give our power away just to sustain those jobs. It will be good in terms of future power generation, as we wouldn't have to build new plants. But new plants have been built because this plant was operating, so if it had closed earlier, we as a country may have saved billions in not having to build new generation.

The problem isn't giving our power away to save those (estimated) 3,200 jobs.

The problem is making 4.5 million Kiwis pay more for power to keep those (estimated) 3,200 jobs.

The government's own (and Labour's) economic philosophy has bought into the idea that we should ruthlessly shed any such "subsidies" as they are damaging to the overall economy and "distort" investment.

This is why so many manufacturing jobs have moved from NZ to other countries with lower environmental standards, lower wages and police forces happy to arrest and jail stroppy citizens who complain about such an approach. OK...the jobs are lost, but the whole economy supposedly benefits from being able to buy cheaper goods.

Looks to me like the 3,200 jobs are being subsidized by every other Kiwi, as well as themselves as they are also paying high power prices.

This runs absolutely contrary to the National Party's own ideas on "Konomic Fishuncy".

This also in the same week the "property rights" government announced that depositors (who are customers, NOT shareholders) would have their property confiscated by the government if their bank fell over. That's like taking money from everyone who buys a Big Mac if their local McDonalds goes bust.

This government has completely lost its way.

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Linuxluver

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#789438 29-Mar-2013 21:42

nickb800: Even if they were to shut down tomorrow, it would take years for the grid upgrades enabling all of Manapouri's power to be sent north - at present most of the power lines from Manapouri go straight to Invercargill.

If we as a society think that it is important to support the thousands of jobs directly and indirectly dependent on the smelter, then I'm sure that we can find a more efficient way to do that that doesn't involve a hidden tax on everyone's power bills and a massive subsidy to an international corporate

What i find interesting is this government promised to lower the cost of power...and we can now see very clearly they been have working tirelessly to do the exact opposite.

......and their voters are none the wiser as most of them don't appear to actually pay much attention. They pay a very high price for such laziness.

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zANavAShi

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#789444 29-Mar-2013 21:58

Linuxluver: This government has completely lost its way.

I can't recall it ever had it.

Sorta on topic, I was watching Zeitgeist Addendum last night and listened with interest at what Jacque Fresco from the Venus Project had to say in support of geothermal energy. Clip here:

I'm wondering why we don't see geothermal promoted here in Aotearoa more often, since we evidently have an abundance of it here in the North Island?

[edit]Line of thought sparked by Nicks comment above about "grid upgrades enabling all of Manapouri's power to be sent north"

Dratsab

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#789463 29-Mar-2013 23:46

I think it would be highly unlikely the closure of the smelter would affect the retail price of electricity, especially in the favour of the consumer. As nickb800 points out, the lines to send "extra" electricity north don't exist - the implication of this is that there can't be an electricity oversupply; Manapouri will simply be scaled down. A build-out of lines to take electricity north to cater for future demand will then start to occur. Once this does, electricity prices will rise to pay for this build-out.

raytaylor

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#789476 30-Mar-2013 01:04

I say data centres.
Cheap power and cheap cooling can be an incentive for data centres to be hosted in southland and could probably offset the distance / ping time for companies like amazon who need processing power for their virtual machines rather than necessarily bandwidth.

Eg. Netflix recently needed to re-encode every movie they had for the resolution of some new app - i think it was the playstation or somethng. Anyhow, rather than take 6 months to do it on their own hardware, they rented a few hundered virtual machines on Amazon's systems and converted them in 1 month.

Each netflix movie needs encoding into 120 different formats and resolutions for all the different devices they support.

http://www.techworld.com.au/article/443660/how_netflix_has_cloud_do_heavy_lifting_video_transcoding/

Water just needs to go through the dam, then the power comes out to run the data centre. At the same time, the same water is then used to cool the data centre, before it returns to the river, 1 or two degrees warmer.

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blakamin

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#789488 30-Mar-2013 01:43

raytaylor: I say data centres.

How long would it take to build data centres in the lower south?
Who's paying?
What will stop them just doing what RT are doing?
How do they get the data to the states, southern cross cable????

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