Tiwai Point Aluminium Smelter facts for kids
The Tiwai Point Aluminium Smelter is a big factory in New Zealand that makes aluminium. It's owned by two large companies, Rio Tinto Group and the Sumitomo Group, who work together as New Zealand Aluminium Smelters (NZAS) Limited.
This factory is the only one of its kind in New Zealand. It's located at Tiwai Point, close to Bluff. The factory brings in a material called alumina and turns it into pure aluminium. This alumina comes from special factories in Queensland and the Northern Territory of Australia. Most of the aluminium made here, about 90%, is sent to other countries, especially Japan.
The smelter first opened in 1971. It was built after the New Zealand government created the Manapouri Power Station to provide it with electricity. The smelter uses a lot of power, about 13% of all the electricity used in New Zealand! It also plays a big part in the economy of the Southland area, making up about 10% of its business.
Sometimes, Rio Tinto has said it might close the factory, like in 2013 and 2020. But each time, they've decided to keep it open after agreeing on a lower price for electricity. In 2021, Rio Tinto made a deal with its power company, Meridian Energy, to pay less for electricity. This means the smelter will stay open until at least December 2024. In 2022, NZAS said it might stay open even longer if it could get new power deals.
People are also worried about the waste stored at the factory. This waste is near a beach that is slowly wearing away.
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How the Smelter Started
In 1955, a scientist found a lot of a rock called bauxite in Australia. Bauxite is used to make aluminium. The company, Consolidated Zinc Proprietary Ltd (ConZinc), then looked for places with lots of cheap electricity. This is because making aluminium from bauxite needs a huge amount of power.
In 1960, ConZinc and the New Zealand government agreed to build a factory and a power station together. The power station would use water from Lake Manapouri and Lake Te Anau to make electricity. But in 1963, ConZinc decided not to build the power station. So, the government built it instead, and it started making power in 1969. Building the Manapouri Power Station caused some arguments because people worried about its effect on nature. Over 264,000 New Zealanders signed a petition called the Save Manapouri to protect the environment.
With electricity ready, ConZinc built the Tiwai Point smelter, and it opened in 1971. At first, it was owned by several companies: Comalco, Sumitomo Chemical Company, and Showa Denko KK.
The Tiwai Point factory is still the only aluminium smelter in New Zealand. In 1980, the government planned to build a second one, but it didn't happen. This was because people didn't want it, the aluminium market changed, and a business partner pulled out.
How Aluminium is Made
The smelter uses a special method called the Hall–Héroult process to change alumina into pure aluminium. First, bauxite rock is dug up in Australia. Then, it's cleaned and turned into alumina before being sent by ship to New Zealand.
The factory has many large "cells" where the aluminium is made. It has three lines of P69 cells, with 208 cells in each line, making 624 cells in total. There's also one line of 48 CD200 cells. The third P69 line was added in the early 1980s as part of the government's "Think Big" projects, which aimed to build large industrial factories.
The Tiwai Point smelter makes some of the purest aluminium in the world, about 99.98% pure! It's one of only two factories globally that make such super-pure aluminium. In 2011, the factory made 354,030 tonnes of aluminium, which was its highest amount ever at that time.
How Much Electricity is Used
The smelter needs about 570 megawatts of power from New Zealand's main electricity system, called the national grid. Most of this power comes from the Manapouri hydroelectric power station. It's sent to the smelter through two large power lines.
This factory uses more electricity than any other single place in New Zealand. It uses about one-third of all the electricity in the South Island and 13% of all the electricity in the whole country. That's like the amount of power used by around 680,000 homes!
New Zealand Aluminium Smelters had a contract with Meridian Energy to get a steady supply of 572 megawatts of electricity until 2030. The price they pay for this electricity was changed in 2015 and again in 2021. The 2021 agreement lowered the price, and the smelter is currently set to close in 2024.
Environmental Concerns
Making aluminium using the Hall-Héroult process creates carbon dioxide gas. This gas is a by-product, meaning it's made during the process. For every tonne of aluminium produced, about 1.97 tonnes of carbon dioxide are released. This means the smelter produces a lot of carbon dioxide each year.
However, in 2007, the head of Rio Tinto Aluminium NZ said that the Tiwai Point smelter was one of the best in the world for having low emissions. The aluminium made here is sold under a brand called RenewAl. This brand promises that less than four tonnes of carbon dioxide are released for every tonne of aluminium made.
A lot of dangerous waste has been stored at the factory site. This waste includes things like spent cell liner, which has chemicals like fluoride and cyanide. Experts think there could be up to a quarter of a million tonnes of this waste stored there. Some people have called it the largest pile of dangerous waste in Australia and New Zealand. Rio Tinto has promised to spend money to remove some of this waste.
Also, 8,000 tonnes of another type of waste, called aluminium dross, were stored in a town called Mataura from 2015 to 2021 without permission. If the nearby Mataura river flooded, this waste could have released harmful ammonia gas. The New Zealand government helped pay for the removal of this toxic waste, which was finished by July 2021.
Economic Impact and Closure Threats
NZAS says that the factory directly employs 800 people and also creates jobs for another 3,000 people indirectly. As mentioned before, the smelter is a big part of the Southland region's economy, making up about 10% of it.
The Tiwai Point smelter has often lost money. For example, in 2012, it lost $548 million. Experts say that how much profit the smelter makes depends mostly on the price of electricity, the raw material (alumina), and the finished aluminium, as well as the value of the New Zealand dollar. Between 2008 and 2013, the price of aluminium dropped by more than 30%.
Rio Tinto has often said it would close the smelter if it couldn't get cheaper electricity from Meridian or if the government didn't give it a lot of money to cover its losses.
Talks About Prices, 2019 to 2021
In October 2019, Rio Tinto announced it was looking closely at the Tiwai Point Aluminium Smelter, including what would happen if it closed. The head of NZAS, Stew Hamilton, said they had been losing money for a year. He said they needed cheaper power to keep running as usual, or they might have to close.
During New Zealand's lockdown for the Covid-19 pandemic, the smelter was allowed to stay open because it was considered an important service.
On March 31, 2020, Rio Tinto said it would close one part of the factory, called potline four. This was to help them manage the rules needed because of the coronavirus pandemic. Potline four is smaller than the other parts and makes about 9% of the smelter's total aluminium.
On July 9, 2020, Rio Tinto announced again that it would close the entire smelter. The company said it would stop operations because a review showed the business was "no longer viable" due to high energy costs and a difficult future for the aluminium industry. They said that 1,000 direct jobs and 1,600 indirect jobs would be lost. This decision came after aluminium prices dropped by 25% in 18 months and power costs went up. At that time, Rio Tinto planned to close the smelter in August 2021.
The smelter became a topic in the 2020 general election. Many political parties promised to try and keep the smelter running. The National Party said they would keep it open for at least five years if they won. They would also help Rio Tinto talk with power companies to get cheaper electricity. New Zealand First leader Winston Peters said keeping the smelter open was very important to him. The government at the time, led by Prime Minister Jacinda Ardern, first said that other projects would create jobs. Later, her party, Labour, said they would try to extend the smelter's life for three to five years to protect jobs and give the community time to find other options. Local politicians also asked the government to save the smelter.
On January 14, Rio Tinto and Meridian Energy agreed to keep Tiwai Point running until December 2024. Part of its power would also come from another company, Contact Energy. The price of electricity was lowered.
Talks in 2022
In July 2022, NZ Aluminium Smelters said it would look for new power deals to try and stay open past the planned 2024 closure date. This time, they suggested getting power from different companies, not just Meridian Energy.
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