Why the closure of Tiwai Pt is no sure thing

A Rio Tinto closure preparation is team due at Tiwai Pt next week and MP Sarah Dowie says the company is not bluffing. Some see consensus building in Wellington for closure, but Bernard Hickey writes that closure is no sure thing.

Rio Tinto has confirmed it is sending a closure preparation team to its aluminium smelter in Southland next week as local MP Sarah Dowie warned the firm is clearly not bluffing about closing Tiwai Point.

"The staff I have spoken to are pretty worried," Dowie told Stuff’s Southland Times.

“This is a serious exercise when you are getting a closure team to come out and take a look around. I was even surprised at how quickly they are moving,” she said.

Meanwhile, Stuff’s Thomas Coughlan writes he thinks the consensus has shifted around Government to just letting the smelter go.

“The unforgiving truth is that extra generation will have to come from somewhere and 1,000 jobs and $200m worth of power lines is a rather low cost for the 'nuclear-free moment' this Government wants climate change to be,” he wrote in an opinion piece last night.

I’m not so sure.

Treasury, the more libertarian members of Parliament and some Greens may want to see it go, but New Zealand First and plenty of people inside Labour are opposed. Shutting Tiwai Point would actually create a net increase in global carbon emissions because the replacement smelters in China would be coal fired.

Power companies also argue they would immediately suspend new renewable power projects, which would make any power price drop temporary.

The income tax and GST hit on the Government’s coffers, along with the extra Transpower investment needed would more than offset any apparent benefits in not stumping up with a payoff similar to the $30 million agreed by the previous Government and the ensuing benefit and other welfare fallout from a closure.

But it is clear this is now a very live issue.

See a lot more detail on the pros and cons in Marc Daalder's explainer from October 24.

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