Tiwai Point Aluminium Smelter facts for kids
The Tiwai Point Aluminium Smelter is a big factory in New Zealand. It makes aluminium metal. This factory is owned by a company called Rio Tinto Group, through a partnership known as New Zealand Aluminium Smelters (NZAS) Limited.
This is the only aluminium factory in New Zealand. It is located at Tiwai Point, close to Bluff. The factory brings in a material called alumina. Then, it turns this alumina into pure aluminium metal. The alumina comes from special factories in Queensland and the Northern Territory of Australia. About 90 out of every 100 parts of the aluminium made here are sent to other countries, mostly to Japan.
The factory first opened in 1971. It was built after the New Zealand government created the Manapouri Power Station. This power station was made to provide electricity for the smelter. The factory uses a lot of electricity, about 13 out of every 100 parts of all the electricity used in New Zealand. It also helps the local economy a lot, making up about 10 out of every 100 parts of the money made in the Southland area.
The company that owns the smelter, Rio Tinto, has sometimes said it might close the factory. This happened in 2013 and 2020. But each time, they decided to keep it open after agreeing on a lower price for electricity. In January 2021, Rio Tinto made a deal with its power company, Meridian Energy. They agreed to pay less for electricity to keep the factory running until December 2024. In July 2022, NZAS said it would try to stay open even longer if it could get new power deals. In May 2024, new electricity contracts were signed with three different power companies. These contracts mean the smelter can stay open until 2044.
Some people are worried about the waste stored at the factory site. 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 large amount of bauxite in Australia. Bauxite is a rock used to make aluminium. The company, Consolidated Zinc Proprietary Ltd (ConZinc), then looked for places with lots of cheap electricity. This electricity is needed to turn the bauxite into aluminium.
In 1960, ConZinc made a deal with the Zealand government. The plan was for the company to build a factory and a power station. This power station would use the water power from Lake Manapouri and Lake Te Anau. 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. Many people were worried about its effects on nature. Over 264,000 New Zealanders signed a petition called the Save Manapouri petition. With electricity now available, ConZinc built the Tiwai Point smelter, and it opened in 1971. Before the factory was built, scientists dug up the area in 1968. They found signs of an old Māori tool-making site and old rubbish piles. They found eleven tonnes of items, including tools, hammer-stones, and fishing weights.
The factory was first owned by several companies. These included Comalco, Sumitomo Chemical Company, and Showa Denko KK. Until 2024, NZAS was mostly owned by Rio Tinto Group (about 79%) and the Sumitomo Group (about 21%). Tiwai Point is the only aluminium factory in New Zealand. In 1980, the government planned to build a second factory at Aramoana. But this plan did not happen because people were against it, and the aluminium market changed.
How Aluminium is Made
The factory uses a special method called the Hall–Héroult process. This process changes alumina (which is aluminium oxide) into pure aluminium metal. Bauxite rock is dug up in Australia. It is then cleaned and turned into alumina before being sent by ship to New Zealand.
The factory has three main production lines. Each line has 208 special cells, making 624 cells in total. There is also one smaller line with 48 cells. The third main line was built in the early 1980s. This was part of the "Think Big" projects by the Muldoon government.
The Tiwai Point factory makes some of the purest aluminium in the world. It is 99.98 percent pure. It is one of only two factories in the world that makes such super-pure aluminium. In 2011, the factory made 354,030 tonnes of aluminium. This was its highest amount ever at that time. In 2015, it made 335,290 tonnes.
Electricity Use
The factory uses 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 travels through two large power lines. The Tiwai Point factory uses more electricity than any other single user in New Zealand. It uses about one-third of all the electricity used in the South Island. This is about 13 out of every 100 parts of all the electricity used in the whole country. This is like the amount of electricity used by about 680,000 homes.
New Zealand Aluminium Smelters had a contract with Meridian Energy to get 572 megawatts of power continuously from 2013 to 2030. The price they paid for electricity was changed in 2015 and again in 2021. The 2021 agreement lowered the price from 5.5 cents to 3.5 cents per kilowatt-hour. At that time, the factory was planned to close in 2024.
Environmental Impact
Making aluminium using the Hall-Héroult process creates carbon dioxide gas. This gas goes into the air. For every tonne of aluminium made, about 1.97 tonnes of carbon dioxide are released. In 2007, the boss of Rio Tinto Aluminium NZ said that the Tiwai Point factory was one of the best in the world for having low emissions. The metal made at Tiwai Point 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 produced.
A lot of dangerous waste has been stored at the factory site. This waste is mainly from the used parts of the factory's cells. It contains chemicals like fluoride and cyanide. Experts think there could be up to a quarter of a million tonnes of this waste stored there. People have said this waste was not properly managed or checked. It was the largest amount of dangerous waste stored in Australia and New Zealand. Rio Tinto has promised to spend $NZ4 million to remove all the aluminium dross and ouvea premix waste.
About 8,000 tonnes of aluminium dross from the factory were stored in Mataura from 2015 to 2021 without permission. If the nearby Mataura river had flooded, this "ouvea premix" could have released harmful ammonia gas. The New Zealand government helped pay New Zealand Aluminium Smelters to remove this toxic waste. It was all removed by July 2021.
Economic Impact and Closure Threats
NZAS says that the factory directly employs 800 people. It also creates jobs for another 3,000 people indirectly. The factory is very important to the economy of the Southland region. It makes up about 10 out of every 100 parts of the region's economy.
Sometimes, the Tiwai Point factory has lost money. For example, in 2012, it lost $548 million. Experts say that how much money the factory makes depends on the price of electricity, the price of alumina, the price of finished aluminium, and the value of the New Zealand dollar. Between 2008 and 2013, the price of aluminium dropped by more than 30 percent. Rio Tinto has often said it would close the Tiwai Point factory if it could not get cheaper electricity from Meridian. They also wanted the government to give them money to cover their losses.
In 2013, Rio Tinto again threatened to close the factory. They wanted to keep getting good deals on electricity prices from Meridian Energy. At that time, the government planned to sell parts of some state-owned electricity companies to private investors. The government wanted to get the most money from these sales. This could have made it harder for Rio Tinto to get low electricity prices. So, the government said it would give money to Rio Tinto to keep the factory open for a short time. But on April 2, 2013, the Prime Minister, John Key, said Rio Tinto had turned down the offer. They wanted a longer-term deal than the government was willing to give. John Key said that if the factory could not make enough money on its own, the government was not interested in keeping it open for a long time.
Many news reports in April 2013 talked about what would happen if the factory closed. They discussed how it might affect electricity prices for others and the share prices of power companies. NZAS made a report that said if the factory closed, the Southland region's economy would shrink by about 7-8 percent. It also said that 2-3 percent of Southland's people might move away. The mayor of Invercargill, Tim Shadbolt, said it was a myth that closing the factory would lower power prices for everyone else. He promised to try and keep it open.
In August 2013, the New Zealand government agreed to pay NZAS $30 million. This deal was to support the factory and save jobs. In return, the factory agreed it could be closed before January 2017. The Finance Minister, Bill English, said the government would not give any more money to support it. He repeated this in 2015 when there were talks that Rio Tinto might sell the factory.
In 2016, an expert said the factory seemed to be making enough money to cover its costs. This was helped by good exchange rates and low prices for alumina.
Electricity Deals from 2019 to 2024
In October 2019, Rio Tinto announced they were looking closely at the Tiwai Point Aluminium Smelter. They were considering many things, including closing it. The head of NZAS, Stew Hamilton, said they had been losing money for the past 12 months. He said their choices ranged from continuing as normal, which would need cheaper power, to closing the factory.
During New Zealand's lockdown for the Covid-19 pandemic, the factory was allowed to stay open. It was seen as an important service.
On March 31, 2020, Rio Tinto said it would close one of its production lines, called potline four. This was to help the factory manage the rules needed because of the coronavirus pandemic. Potline 4 first opened in 1996. But it was turned off for six years between 2012 and 2018. It reopened because aluminium prices went up and they got a new deal with their power company, Meridian. Potline four is smaller than the other three lines. It makes about 31,000 tonnes of aluminium a year, which is about 9 out of every 100 parts of the factory's total. It uses about 50 megawatts of electricity.
On July 9, 2020, Rio Tinto announced again that it would close the factory. The company said it would slowly stop operations. They said a review showed the business was "no longer viable" because of high energy costs and a difficult future for the aluminium industry. The company stated that 1,000 direct jobs would be lost. Another 1,600 jobs connected to the factory would also be at risk. This decision came after aluminium prices dropped by 25% in the previous 18 months, and power costs went up. At that time, Rio Tinto planned to close the factory in August 2021.
The factory became a topic in the 2020 general election. Many political parties promised to try and keep the factory running. The National Party said that if they won the election, they would keep the factory open for at least five years. They would also help Rio Tinto, power companies, and Transpower talk to each other to get cheaper power. New Zealand First leader Winston Peters said keeping the factory open would be a key point in any government talks. He even had a 20-year plan for the factory. The government said it would not give any more money to the company. Prime Minister and Labour leader Jacinda Ardern first said a government project to widen the Homer Tunnel would create some local jobs. But she said no single industry could make up for the lost jobs. Later, Labour said it would try to extend the factory's life by three to five years if elected. This was to protect jobs in the short term and give the community time to find other options. Local politicians also asked the government to save the factory.
On January 14, 2021, Rio Tinto and Meridian Energy agreed to keep the Tiwai Point factory running until December 2024. Some of its power would also come from Contact Energy. The price reduction was later reported to be from 5.5 cents to 3.5 cents per kilowatt-hour. However, the fees for sending the power did not change.
In July 2022, NZ Aluminium Smelters said it would look for new power suppliers. This was to try and stay open beyond the planned 2024 closure date. This time, they suggested getting power from companies other than Meridian Energy.
New Twenty-Year Power Deals
After two years of talks, new power supply contracts were agreed in May 2024. These deals were between the factory and three electricity companies: Mercury, Contact Energy, and Meridian Energy. The contracts are for twenty years. They also include some new rules. The factory now has to give at least two years' notice if it plans to close. There are also penalty payments of at least $180 million if it closes early. The new contracts also require the factory to be able to reduce its power use by up to 185 megawatts. This would happen when the electricity system is under stress. These new power deals are expected to make the electricity sector more stable. They are also expected to lead to new power generation projects being built.
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