Outlook for Tiwai smelter looks brighter as aluminium prices surge

As  rising   inflation  unsettles  domestic  businesses, New Zealand’s  export   economy  – in contrast – is on   a  roll.  It  faces  its  own  problems, particularly  with rising shipping charges, and  delays  in  reaching markets.  But, as  Point  of  Order  noted yesterday,  the  dairy  industry  is  winning  record prices in global markets, and other  food  exports  are also  in  strong  demand.

Another  stand-out    is  aluminium,  which  last year spiked  up 62% to $US2934 to October . In recent weeks  it has  strengthened again, topping $US3000.

At  this  level Rio Tinto, owner  of  the  smelter  at  Tiwai Point,  will  be having  second  thoughts about closing  it.  The  smelter,  which  employs  about  600 workers  (plus  another 2000  indirectly), extended  its  electricity contract for  power from Meridian’s  Manapouri’s  generators (said  to be  the  cheapest  electricity in smelting alumina in the  world)  only to 2024.

If  Rio  Tinto  “walks”, many  of  its  competitors  might  step  in, if  aluminium prices remain  anywhere near  this  elevated  level.

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