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Rio Tinto Extends Tiwai Smelter Operations to 2044

New 20-year Energy Deals Secure Smelter’s Long-Term Future

by Ikeoluwa Ogungbangbe

Global mining company Rio Tinto has made plans to keep running its aluminum smelter at Tiwai Point until at least 2044, a significant step that furthers its commitment to New Zealand’s industrial sector. The decision is a part of a larger plan to ensure the region’s activities remain sustainable for the long run. This plan is supported by a 20-year contract with regional energy providers for the delivery of electricity.

The South Island’s Tiwai Point smelter, which supports many jobs and community initiatives both directly and indirectly, is a vital component of the local economy. Due to the challenging economics of rising energy costs and a volatile global aluminum market, Rio Tinto announced in early 2021 possible closure plans, putting the facility’s existence in doubt. However, the new agreements with Meridian Energy, Contact Energy, and Mercury NZ, which collectively provide the smelter with 572 megawatts (MW) of electricity, have breathed new life into the facility’s operations.

Rio Tinto’s New Zealand Aluminium Smelters (NZAS) unit will take part in 20-year demand response agreements as part of the conditions of these contracts. These indicate a flexible approach to energy management that is advantageous to the corporation as well as the national grid, as they say that NZAS may be required to reduce electricity use by up to a total of 185MW.

“We are glad the long-term future of the Tiwai Point smelter has been assured with these agreements,” Rio Tinto Aluminium Chief Executive Jérôme Pécresse said of the new arrangements. They reassure us that our people and resources in New Zealand can continue to produce aluminum with high purity and low carbon at a competitive price, which is essential for the world’s energy transformation.”

The smelter is well known for manufacturing low-carbon, high-purity aluminum, which is essential for a number of industries, including electronics and the automobile sector, where environmental concerns are becoming more and more important. Maintaining its activities guarantees not only the survival of local employment opportunities but also New Zealand’s continuous contribution to the world’s supply of aluminum that is less harmful to the environment.

Apart from guaranteeing the energy supply to the smelter, Rio Tinto has increased its ownership shares in the sector. A deal has been agreed for the firm to purchase Sumitomo Chemical firm’s (SCC) 20.64% stake in NZAS. Upon conclusion of the transaction, the company will own all ownership interests. Rio will also buy a further 2.46% of Boyne Smelters Ltd (BSL) from SCC, increasing its ownership to 61.85%. Boyne Island Aluminum Smelter is run by BSL in Gladstone, Australia, marking another strategic investment by Rio Tinto in the Pacific aluminum sector.

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