20-year renewable energy deal keeps Tiwai Point aluminium smelter competitive

New Zealand Aluminium Smelters (NZAS) has secured the future of the Tiwai Point smelter with new 20-year electricity agreements. These arrangements ensure the smelter's ability to competitively produce high-purity, low-carbon aluminium powered by a diverse mix of renewable energy sources from New Zealand's South Island.

NZAS owns and operates the Tiwai Point smelter and has entered into contracts with electricity generators Meridian Energy, Contact Energy, and Mercury NZ. These agreements establish the pricing for 572 megawatts (MW) of electricity, sufficient to meet the smelter's entire energy requirements. Subject to regulatory approvals and other conditions, these contracts are expected to commence in July 2024 and extend until at least 2044.

Jérôme Pécresse, the CEO of Rio Tinto Aluminium, said, “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."

“They give us confidence that our New Zealand workforce and assets can continue competitively producing the high purity, low-carbon aluminium needed for the global energy transition."

“This is an exciting new chapter, and we would like to thank everyone involved, including our new energy partners, our local Indigenous partners Ngāi Tahu, the Southland community, the New Zealand government and our NZAS workforce, for supporting us here today.”

The new electricity arrangements feature 20-year demand response agreements with Meridian Energy and Contact Energy. Under these agreements, NZAS may be asked to reduce its electricity consumption by up to 185 MW. This measure will help ensure a secure electricity supply to New Zealand homes and businesses during critical times.

Rio Tinto has agreed to acquire Sumitomo Chemical Company Limited’s (SCC) 20.64 per cent stake in NZAS for an undisclosed amount in a separate transaction. Once the transaction is complete, Rio Tinto will own 100 per cent of NZAS.

Rio Tinto has agreed to acquire SCC's 2.46 per cent stake in Boyne Smelters Ltd (BSL), which operates the Boyne Island aluminium smelter in Gladstone, Australia. The price of the acquisition has not been disclosed. Upon completion, Rio Tinto's ownership in BSL will increase to 61.85 per cent.

The sale and purchase transactions are integral to SCC's business portfolio transformation. Each transaction is contingent upon fulfilling various conditions precedent, including obtaining regulatory approvals from New Zealand's Overseas Investment Office and Australia's Foreign Investment Review Board, where applicable.