The fresh documents released under the Official Information Act, an important part of New Zealand's constitutional framework showcased, in 2020, the owners of the Tiwai Point aluminium smelter refused the offer of direct payment from the Government.
As an opening offer to the aluminium smelter, a payment of between $15 million and $35 million was at one stage being discussed by officials, the documents reveal.
The payment would have been conditional on the Tiwai smelter spending more than the $300 million it has currently allocated to clean up the smelter site following its shut down and tied to the smelter staying open until 2024.
In November’20, an offer was made by the government, which was called "Southland Transition Bond”.
However, the released document by OIA clearly states the smelter's owners, Rio Tinto and Sumitomo, refused the proposal.
In December’20, Maureena van der Lem, Treasury Commercial Performance Manager sent an email to Andrew Horvat, Rio Tinto’s General Manager of Energy, quoted: “Unfortunately, Rio Tinto and Sumitomo have declined to make any substantive remediation commitments before the finalisation of a preliminary disclosure plan next year, and has rejected the Government’s proposal of a bond payment linked to remediation, without tabling any alternative suggestions.”
Rio Tinto has been striving for support from the government to reduce the electricity transmission charges it pays Transpower which seems to have been its preferred form of assistance from the government.
Following Rio Tinto’s acceptance of an offer of cheaper electricity from Meridian to keep the smelter open until at least the end of 2024, the ministers discontinued the negotiations in 2021.
Despite this, a question mark still emerges to hang over the précised assurances Rio Tinto will deliver to clean up the site once the smelter shuts down, the documents suggest, with officials expecting an offer of government assistance could be put back on the table.
February 2021, Treasury report said: “it remained an open question whether New Zealand Aluminium Smelter will ever make adequate and meaningful information available to enable the Crown to make an accurate assessment of the true extent of the remediation requirements, their likely cost, and NZAS' minimum legal requirements.”
"Rio Tinto's negotiating position to date has been to deny the Crown access to accurate information about the state of NZAS' environmental remediation obligations, and to make no meaningful commitments," officials said.
“But the longer it takes Rio Tinto to share that information, the more time the Crown has to collect information from other sources, and shorter the time over which the Government might provide financial relief to the smelter”, Treasury officials advised ministers.
“It was uncertain if the smelter will close in 2024”, Treasury said.
"By that time, it is anticipated that transmission infrastructure enhancements will significantly reduce NZAS' bargaining power with Meridian. This will further strengthen the Crown's bargaining position and may enable the Crown to seek additional commitments from the smelter if any potential agreement," it said.
Treasury added: “The new power deal the smelter accepted from Meridian in January meant the smelter's underlying profitability would be enterprising unless there was a significant fall in aluminium prices.”
The documents counsel officials were never uncertain that the offer from Meridian was going to be enough to entice Rio Tinto to keep the smelter open until 2024.
"While the economics of Tiwai Point is likely to look more challenging in 2024, it remains possible that NZAS may be able to continue operations past this point. Presumably, part of the value Rio Tinto places on transmission relief includes an expectation that it will continue past 2024 and be 'baked in' for future operations," officials said.
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