Written By: - 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.
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Scoopit!
I was going to do the whole ‘call their bluff’ pun on the post yesterday but couldn’t fit it in. Glad to see you taking full advantage of the comedic potential of geography, Tane.
No Right Turn’s numbers are interesting but it has to be borne in mind that there isn’t currently the capacity to take all of Manapouri’s power out of the region. There would have to be new investment, not that that should necessarily be a block on the idea.
In counter to that though, the South Island is now a net importer of power, thansk to the power dmemands of the growing dairy industry, especially in Southland… So, a lot of the power from Manapouri could be used relatively close to source; it wouldn’t need new cables all the way up to Auckland as some are suggesting.
Purely unintentional Steve, you know how I hate puns. But in any case, I can’t take credit. Looks like that old grump IrishBill beat me to the pun by a good 24 hours.
That CAFCA release – classic.
Have you bothered to ask the people of Southland how they would feel if it “buggered off” . I expect Lesley Soper, as the local labor MP will be doing a lot behind the scenes to address the locals concerns
Campaign Against Foreign Control of Aotearoa?
Nrever heard of this group, but I bet their members are Tiki wearing pakeha school teachers who teach their kids that America and western countries are here to take away your money.
I wonder if they would be against Foreign Control of New Zealand, if says a company from the Pacific Islands or maybe Cuba wanted a stake here.
Personally I’m not sure Rio Tinto should bugger off, but NRT makes a compelling argument. Obviously if Rio Tinto were to ship out you’d want to ensure there was alternative employment provided for the workers. NRT suggests using say $10 million for economic development in Southland. And hey, I’m the last person to suggest we leave workers on the scrapheap.
CAFCA’s been around for a while Brett. I don’t always agree with them but they do a lot of good work. Rather than continuing to parade your ignorance, why not go have a look for yourself?
http://canterbury.cyberplace.co.nz/community/CAFCA/
They also have a blog at http://www.watchblogaotearoa.blogspot.com/
Steve
Agree with your comments on restricted exit routes for Manapouri. Also I/S;s analysis is flawed in assuming you can do a straight swap for Huntly so he probably overstates the benefits.
If we did not have Huntly we would be in deep energy and economic do do if current hydro conditions were replicated.
The SI is NOT a net importer of energy overall but it is currently. Huntly and Whirinaki are keeping Chch’s lights on as well as Auckland’s with big southward flows over Cook Strait.
Do the CAFCA have more members than letters in their Acronym?
Mike, yes.
[Tane: Santi you're still banned.]
I’d rather ask I/S this on his blog, but since he doesn’t allow comments…
Where did the $10 million figure come from? Sounds quite arbitrary and not particularly deeply thought out.
Capitalists proving that’s they’re uneconomical to keep around – Love it
… and they all vote NZF
Tane – Rio Tinto shoul bugger off. An very reputable friend of mine who has done a lot of campaigning against questionable projects in the electricity sector got sliped some information about Meridian’s (government owned) secret deal with Rio Tinto. They get their electricity at below cost price, meaning that we’re subsidising their $400 million per year profits. It’s a national scandal. If you would like I could foward the guy’s email address to you, and you can ask him yourself.
you can email me at [deleted]
norightturn’s piece is just the icing on the cake.
Oh and could you delete my email from the page when you get the chance please?
[Done. Cheers.]
Nome, thanks for that. I’m flat out with work at the moment but I’ll flick you an email in due course. Cheers.
nome
what is the cost price?
Tane, I have just read your post and I want the last 5 minutes of my life back which I have wasted on your post. Just bloody awful.
First of all, where is this alleged political consensus? Once again, the only links you provide are to other Standard posts which are a smokescreen (are you taking lessons from Pierson?). If you’ve got consensus show us. It would be the very least you could do. Heck, even your beloved Farrar could do that. But no, you won’t because you can’t largely due to the fact that you unreservedly believe that if you post it on this abhorrent blog then it must somehow become fact.
In all honesty, only the Government has come out in response to Rio Tinto’s submission and despite what you may think, that in itself is hardly a consensus. It’s also highly predictable because Parker loves his pet-ETS project and will do as much as he can to push it through in order to seal his legacy as the most capable politician in the most useless portfolio.
What I want to know is this a new trend for the Labour Party to put taxes before workers? I know the Greens love to talk smack about workers rights but then will gladly lay off workers left, right and centre. No doubt they are pleased with the recent closure of the Oringi plant – because meat is a moral evil. I’m equally sure that they will applaud the closure of Rio Tinto too.
Also, CAFCA is not a worthwhile group to quote – they’re in the same league as the so-called evil dichotomy that is the Sensible Sentencing Trust. Besides, of course they’re going to be against Rio Tinto’s submission. It gives them something to do in the days between benefit checks arriving in their bank accounts.
[that's not what dichotomy means]
Steve: No Right Turn’s numbers are interesting but it has to be borne in mind that there isn’t currently the capacity to take all of Manapouri’s power out of the region. There would have to be new investment, not that that should necessarily be a block on the idea.
And the beauty of those numbers is that the cost of that new investment is already accounted for, Comalco (as they were then known) having included not having to pay it as a “benefit”.
Insider: I’m suggesting we could relegate Huntly to dry year backup, so it will be there when we need it, but its emissions will be massively reduced. So, yes, the financial benefit is overstated – but given that the amount of electricity displaced is understated (Tiwai Point uses 15, Huntly generates 12.2%, so it will likely reduce gas usage too) and the scale of the difference, I think there’s sufficient fudge factor there to cover it.
Stephen: $10 million a year for regional development is a number I pulled out of my arse (it is also, coincidentally, the number Comalco uses as the cost of deferred unemployment). But since the net benefit of closure is $26 million a year, feel free to increase it.
Hoolian, having read your comment I want the last five minutes of my life back too. Labour has rebuffed Rio Tinto’s posturing. John Key was quoted on Radio NZ saying the same. The Greens have slammed Rio Tinto. No one I can find outside David Farrar and the Herald is backing Rio Tinto on this one. Note also that I said the consensus was ‘emerging’.
I quoted CAFCA because I thought their release was worth mentioning. They don’t get mentioned often on this blog but I thought this one was worth it.
I’m not sure how I’m supposed to respond to your delusional attacks on the Greens.
Seriously though, there are more constructive ways to disagree than to come here and hurl abuse at us. You might want to consider that in future.
I/S
“Tiwai Point uses 15, Huntly generates 12.2%, so it will likely reduce gas usage too”
I think you mean perecent. IF so your numbers don’t appear right. Huntly generates about 1400MW at capacity whereas Comalco’s demand is about 650MW and Manapouri can do about 850MW. But you may be talking about actual energy consumed/supplied, as opposed to capacity which could explain the difference, or just the coal burning part of Huntly.
WIthout having read your documents, I note that Meridian claim that if they had to pay for the HVDC network, it would be an economic cost to them of $1 billion. Quite a different take on the cost of developing and maintaining the grid which shows that some of these numbers have to be taken with a pinch of salt.
I know what dichotomy means and its use is intentional. Read into that how you will.
Labour has rebuffed Rio Tinto’s posturing. John Key was quoted on Radio NZ saying the same. The Greens have slammed Rio Tinto.
Again, this isn’t a consensus. Believe me when I say that Parliament is not made up of just three parties. My point is that if you are to post scathing remarks on the smelter’s position and be a voice for ‘political consensus’ then best provide ample referencing. It’s the very least you can do. It’s a way for your readers to validate what you’re saying. What could you possibily be afraid of?
And the Govt hasn’t ‘pulled their bluff’ – they’ve merely dug in their heels. We have yet to see what effects this will have on NZ and the ETS. But hey, the taxation of environmental pollutants is more importan than 3000+ workers and their families, right?
nome
Re Tiwai’s ‘super secret’ prices, if you look in the report at I/S’s site Comalco say they expect to pay about 5.7c/kwh over the next few years.
Hoolian, I’d say Labour, the Nats and the Greens count as an ‘emerging consensus’. Of course you’re free to disagree, and even free to be a pedantic jerk in the process.
Note to Cullen: Buy Tiwai Point. Before November.
Tks,
M Pilott
Insider – Huntly has 1000Mw coal, and the new e3p gas turbine gives another 435Mw in gas generation, if that helps.
Hoolian – last I heard, it wasn’t a policy of the Labour Party to have their policies held hostage by multinationals – that’s more National’s schtick…
Matthew
why would you want Cullen to buy Tiwai ?
Insider: I’m referring solely to the old Huntly plant, without E3P, and this is on actual GWh produced over the course of the year.
And yes, I’m aware that the numbers will depend on who you talk to. But one reason why I’m using Comalco’s numbers is that they can’t then argue that they’re bullshit. These are the benefits according to them, and on those own figures, those benefits are outweighed by the costs.
(Oh, and while we’re at it: there’s another ~$13 million in direct emissions from Tiwai Point we can add to the “benefit” column as well (yes, they produce CO2 themselves as part of the process. Joys of using carbon anodes))
Matthew: I’ll second that question. It’s not beneficial for the NZ public as it is, and it’s not vital infrastructure like a railway. Why buy it?
Insider – why not? It’s a nice plant, runs well, properly maintained by the old owner, who only took it to the shops every other Sunday…
Idiot/Savant – your figures are based upon the cost/benefits to NZ, if I understand correctly.
I am being mighty simplistic, but if NZ owned it, they’d also get the profit from the production, which isn’t part of your calculations…
Quite a few jobs, and a fair bit of dough to be kept/made(plus we might get a bargain on it if they do decide to ship off).
Worth a thought, though I haven’t the time to do the sums here…
Why oh why would you want the government to be involved in another business that they have no experience in and takes them away from core responsibilities. (health, education, law and order, energy production, transport)
Plus imagine how much more expensive to run it would be if you had to buy the smelting expertise RT has in-house.
Sheesh, Matthew. That’s terrifying. If, as seems to be the case, you are suggesting that the government should go around buying and running any business that it thinks it can make a buck out of, I think you have just put the cause of the “social democrat” back to about where it was in 1935.
profit?
profit that can pay for schools and hospitals, instead of taxes?