A deal made between Rio Tinto and a major Japanese trading house shows the NZ Aluminium Smelter owner’s increased reliance on the big Bluff plant – even as negotiations over its future continue.
In what is apparently the first deal of its kind, mining giant Rio Tinto, which owns New Zealand Aluminium Smelter, is selling low CO2 aluminium into Japan through Marubeni Corporation (one of Japan’s largest trading houses) for use by a major motorcycle manufacturer.
Rio Tinto has interests in sustainable aluminium production in other countries, including Iceland and Australia, but the motorcycle deal is for higher purity aluminium from New Zealand.
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Rio Tinto’s New Zealand external affairs director Simon King said the deal could strengthen the position of NZ Aluminium Smelter in Japan and other Asian markets.
“Aluminium from Tiwai is seeing good demand locally and globally, and its high purity is attractive to a range of global customers.”
He said NZ Aluminium Smelter was well positioned to play a key part in Rio Tinto’s sustainability offering.
The average smelter around the world produces 12 to 13 tonnes of CO2 for every tonne of aluminium produced, while Tiwai Point generates just two tonnes of CO2.
“We expect more interests for NZ Aluminium Smelter metal in the market as we progress the market development work in the supply chain.”
All of its sales of sustainable aluminium into Asia Pacific will be through Tiwai Point or Tasmania’s Bell Bay smelter. The smelters annually produce around 395,000 tonnes and 190,000 tonnes respectively.
Unlike Tiwai, which uses hydropower from Meridian’s Manapōuri Dam, Bell Bay is on Tasmania’s main grid which is around 80 percent renewable, similar to New Zealand.
Rio Tinto threatened to close Tiwai Point in 2020 citing low aluminium prices and high energy costs.
It uses 12 percent of New Zealand’s total electricity.
Global aluminium prices hit as low as $2410 a tonne in early 2020, but were sitting around $3,900 at the end of 2022, hitting above $5000 along the way.
The boom in aluminium prices coincided with cheap power from Contact Energy and Meridian in a deal to extend the smelters life to 2024 to plan for a transition in Southland’s economy.
An Electricity Authority review in October 2021 found households could be paying an additional $200 a year to subsidise cheap energy received by the Tiwai Point aluminium smelter.
Since then Rio Tinto has made it clear it now wants to stay and is in talks with Meridian and other power generators to make that happen.
When NZ Aluminium Smelter was looking to exit, Meridian signed Australian resources company Woodside Energy as a preferred partner to develop a green hydrogen project in Southland with the Manapōuri electricity.
Meridian says hydrogen and aluminium aren’t mutually exclusive, and the two could coexist – but Tiwai would have to be more flexible and will end up paying more for power.
“We see a clear future for the Tiwai smelter, which is powered by renewable electricity, beyond 2024, and are working to secure it,” King said.
