Securing the future: New Zealand Aluminium Smelters locks in 20-year electricity deals

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New Zealand Aluminium Smelters (NZAS) has successfully negotiated a series of 20-year electricity supply agreements with key providers to sustain its operations at the Tiwai Point aluminium smelter. This long-term commitment ensures a steady supply of high-purity, low-carbon aluminium, critical for the global energy transition. The contracts, involving an aggregate of 572 megawatts (MW) from Meridian Energy, Contact Energy, and Mercury NZ, will meet the smelter’s total electricity requirements starting in July 2024 and continuing until at least 2044.

Collaborative Efforts Yield Fruitful Results

The agreements are currently pending regulatory approvals and other conditions. Jérôme Pécresse, Rio Tinto Aluminium Chief Executive, expressed satisfaction with the outcome, stating, “We are pleased the long-term future of the Tiwai Point smelter has been secured with these agreements, which were reached with a genuinely collaborative spirit between all parties.” He further noted the pivotal role of various stakeholders, including local Indigenous partners Ngāi Tahu, the Southland community, the New Zealand government, and the NZAS workforce, in reaching this milestone.

NZAS secures its future with 20-year renewable electricity deals, strengthening its role in producing low-carbon aluminium essential for global energy needs.

NZAS secures its future with 20-year renewable electricity deals, strengthening its role in producing low-carbon aluminium essential for global energy needs.

Strategic Acquisitions and Commitments

Simultaneously, Rio Tinto has taken significant steps to consolidate its holdings by agreeing to purchase Sumitomo Chemical Company Limited’s (SCC’s) 20.64% interest in NZAS and a 2.46% interest in Boyne Smelters Ltd (BSL), with undisclosed terms. These acquisitions, pending approvals from relevant authorities, will increase Rio Tinto’s stake in BSL to 61.85% and make NZAS a wholly-owned subsidiary.

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Economic and Environmental Impact

The new electricity arrangements include demand response agreements with Meridian Energy and Contact Energy, under which NZAS may be requested to reduce electricity consumption by up to 185MW to help secure electricity supply to New Zealand homes and businesses during peak times. These measures underscore the smelter’s integration into New Zealand’s broader energy strategy, which relies heavily on renewable sources.

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Annually, the Tiwai Point smelter contributes approximately NZ$400 million to the Southland economy, equivalent to 6.5% of the region’s GDP, and supports around 1,000 full-time equivalent employees and contractors, with an additional 2,200 people employed indirectly.

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