THE ripple effects would be “catastrophic” and far reaching for Southland and beyond should the Tiwai aluminium smelter close, Southland business leaders say.
Southland Chamber Commerce president Neil McAra said the closure of the Tiwai smelter would be devastating for Southland.
“…when we have 1000 [people working] at the site and another 1200 indirect jobs. Small business [would] close as a consequence of this.”
A closure team from Rio Tinto was in Invercargill this week as part of a strategic review to determine the ongoing viability and competitive position of the smelter’s operation.
The team was tasked with assessing what would be required should a decision be made to close the smelter.
Sheet Metalcraft Ltd was one of numerous Invercargill businesses which would be affected should the smelter close.
“The economic loss to Southland and further afield would be huge if they were to shut up,” Sheet Metalcraft Ltd engineering operations manager Ryan Harvey said.
“It’s not something we want to see.”
Mr Harvey said the engineering firm had had a “long-standing relationship” with the smelter since 1978, with work for the smelter making up a large portion of its business.
If the smelter closed, the impact on his business and other companies he did business with would be huge, he said.
However, at present the uncertainty surrounding the smelter’s future was not impacting his business, with work for the smelter continuing, he said.
“It’s business as usual.”
Tiwai smelter is owned by New Zealand Aluminium Smelters (NZAS), a joint venture between Rio Tinto and Sumitomo Chemical Company Ltd.
A Rio Tinto spokesperson said this was the first time the company had conducted a strategic review of Tiwai smelter.
The review was a formal process which included exploration of all possible options, including detailed closure planning.
The strategic review was expected to be completed by the end of March next year.
NZAS chief executive and site general manager Stew Hamilton said the strategic review would consider all options, including a “reduction in power costs which would enable the smelter to keep running at full capacity, operating as a smaller smelter and closure”.
“It is a very tough time of uncertainty for us all but we are focussed on staying and hope we can get the settings right for the smelter to keep on contributing to Southland and New Zealand,” he said.
“Our local community has made it very clear they wants us to continue being a vibrant part of Invercargill and for the smelter to keep operating at full capacity, and so do we.”
Otago Daily Times, Meridian Energy chief executive Neal Barclay told the company’s investor they were engaged with the owners of the smelter through the review period.
The smelter owners had the right to issue 12 months’ notice to reduce its consumption or terminate its contract with Meridian, he said, and the fact they hadn’t done so suggested they were actively looking for a solution.
“That said, I think announcing a strategic review is a serious move. It’s certainly an escalation.
“The smelter owners know this will be unsettling for their own set, stakeholders and the wider community of Southland. We know that they wouldn’t have taken this decision lightly.”
Invercargill Mayor Sir Tim Shadbolt, deputy mayor Toni Biddle and Mr McAra held a meeting last week to prepare a strategy to advocate for fair operating conditions for the smelter.
Cr Biddle said the region did not want a “handout”.
“Honestly, we are fighting for fairness here.
“The ripple effect of the closure would be catastrophic to our region and people don’t realise others [throughout New Zealand] will be affected too.”
Sir Tim said Southland was becoming resilient to threats to the region, with the proposed tertiary education reform and potential closure of the smelter.
“That means we are learning to fight well and stand up for ourselves – we have to. We have to save ourselves and we are getting pretty good at it.”