Contact Energy’s Clyde and Roxburgh Dams will provide energy to Tiwai Smelter, after news announced the facility will remain open until the end of 2024.

Contact Energy CEO Mike Fuge welcomes the news that the life of New Zealand’s Aluminium Smelter (NZAS) at Tiwai Point will be extended until at least the end of 2024 while an economic transition for Southland is developed.

“The deal between Meridian and NZAS ensures sustainable smelter operations in the medium term and allows time to plan for an ultimate exit of New Zealand’s largest energy user,” Mike says. 

“This is great news for Southland and New Zealand, global carbon emissions, and Contact’s shareholders.”

As part of the arrangement announced, Contact has agreed to supply Meridian Energy with a portion of the electricity required to power the NZAS smelter at Tiwai Point. 

Under the deal, Contact will provide an average of 100 megawatts of baseload electricity through until the end of 2024 - assuming the smelter requires 572 megawatts of electricity.

“We are pleased to have played our part in helping secure the financial sustainability of the unique low-carbon smelter at Tiwai and retain the 1,000 high-paying jobs in Southland and the 1,600 associated contractor and supplier roles too,” Mike says. 

“Many other jobs around New Zealand would also have been lost if there was a disorderly exit.”

Mike says the news also comes as Contact is continuing to advance its “world-class” Tauhara project in readiness for an investment decision. 

“The Tauhara geothermal project is New Zealand’s best low-carbon renewable electricity opportunity. 

“It will operate 24/7, is not reliant on the weather and is ideal for displacing baseload fossil fuel generation.”

Contact Energy will power a portion of New Zealand’s Aluminium Smelter at Tiwai Point. Photo The Central App. 

Central Otago District Mayor Tim Cadogan says the news is great for the whole lower South Island. 

“I think this is good news for the lower South and has to be good for Central Otago,” he says. 

“The planned closure of Tiwai would have taken significant income out of the southern economy and that would have to have a ripple effect here I would think.”

The Government says the deal between Meridian and Rio Tinto for the Tiwai smelter to remain open for another four years provides time for a managed transition for Southland.

“The deal provides welcome certainty to the Southland community by protecting jobs and incomes as the region plans for the future,” Grant Robertson says.

“The Government is committed to working on a managed transition with the local community.

“The Government has been focussed on helping to ensure a deal is reached which kept the smelter open for longer than the year initially proposed by Rio.

“The four-year deal will help protect jobs and incomes in Southland and provides a timeline for the Southland community to work alongside the Government to map out a clear transition plan for the region for the time the Tiwai smelter is shut down,” Grant says.

“The strong relationship between the Government, iwi, local authorities and the Southland business community means we are in a good position to map out a transition plan which allows for high wage jobs to remain in Southland as the region transitions, while providing new opportunities for economic growth in the region,” Minister Megan Woods says.

“Meridian’s announcement that it is actively developing new growth opportunities for when Tiwai closes, including process heat, IT infrastructure and green hydrogen, highlights the opportunities for high-paying jobs that the Southland region has as the transition is made.”

Grant Robertson says the news is particularly welcome given the economic uncertainty created by the global COVID-19 pandemic. 

“New Zealand’s strong economy compared to the rest of the world, and steady political system, means this country is a great place to do business, and we welcome this commitment from Rio to continue its operations in Southland for the next four years.”

The Government and Rio Tinto remain in discussion around transmission pricing and remediation of the smelter site.

“Understanding the extent of the environmental impact of the smelter and removal of toxic waste from this site remain a bottom line for the Government.” 

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