Rio Tinto threats backfire

Written By: Tane - Date published: 10:50 am, May 14th, 2008 - 72 comments
Categories: climate change, economy, Environment - Tags: capital strike, Rio Tinto

Rio Tinto’s threat of capital strike appears to have backfired on them, with a political consensus emerging that the multinational has overplayed its hand on this one and some even starting to question whether we might be better to just shut the smelter down and be done with it.

CAFCA were particularly blunt:

Campaign Against Foreign Control of Aotearoa calls Rio Tinto’s bluff. Stop crying wolf, stop holding Southland and the country to ransom. Go ahead and close the smelter and bugger off. See if we care, the country will be much better off without you…

The smelter is the textbook example of corporate welfare in New Zealand. It is the biggest bludger in the country. Those who extol the bracing discipline of market forces for everybody else are strangely coy when it comes to this corporate recidivist. When the Government renationalised the railways last week, one pejorative word which was heard a lot was ‘featherbedding’. If you want to see the most feathered of beds, look no further than the Bluff smelter.

Well, guess what? No Right Turn crunched some numbers and it turns out CAFCA’s right. According to Rio Tinto’s own figures, shutting the Tiwai smelter would actually benefit New Zealand to the tune of $26 million a year by allowing us to shut the inefficient coal-burning Huntly power station and reduce our carbon emission liabilities.

Seems Rio Tinto’s bargaining position isn’t nearly as strong as they thought, and the Government was right to call their bluff.

72 comments on “Rio Tinto threats backfire”

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roger nome 71

15 May 2008 at 3:17 pm

insider – I already dealt with that above

You know, I actually think that all the electricity should be run on PPP basis with 60-40 government-private ownership ratio. In that instance, their books would have to be transparent, and there would be less scope for corporate welfare that the rest of us have to subsidise.

Currently there’s a lot of ologopolistic behaviour in the NZ electricity market because of the vertical integration of the five main companies. I say that if we’re going to pay too much for power it should at least come back to us in taxes/government spending.

The problem with a small utilities market like NZ is that you get profit-gouging oligopolies or monopolies that need to be constrained by the government. But at the same time I want utilities run efficiently so their price is kept down. That’s why I support a PPP arrangement for all utilities companies in NZ.
burt 72

15 May 2008 at 8:43 pm

Shut down the smelter and convert the plant to extract Hydrogen and Oxygen from water. Use the Hydrogen to power as many cars are we can in Southland or the whole south island if there is enough gas.

Of course as long as Shadbolt is Mayor down there he might want to set up a massive indoor hydroponics operations and grow a very big quantity of high quality weed.