All over the news this morning:
Rio Tinto rejects Tiwai subsidy offer
Rio Tinto has rejected the Government’s offer to subsidise the Tiwai Point Aluminium Smelter power bill.
The smelter needs help to survive – it has been shedding staff and could close if it can not get an agreement with hydroelectricity generator Meridian Energy, possibly throwing the Southland region into economic crisis.
Last week, the Government opened discussions with the smelter’s ultimate owners, global mining giant Rio Tinto, in a bid to broker a deal over a variation to the existing electricity contract.
But Prime Minister John Key told Newstalk ZB’s Mike Hosking that the company came back over the weekend to turn down the offer made by the Government, saying they wanted a longer term deal than the Government was prepared to offer.
I have some sympathy for the Nats on this one, they are between a rock and a hard place. While most of the country will be worried about the effect on Southland, however, I suspect the Nats’ concerns will be a little closer to home:
Should the smelter – which uses one seventh of New Zealand’s electricity output – close, wholesale power prices are likely to fall, affecting the earnings potential of all power companies including Mighty River which the Government is now the process of partially privatising.