For as long as the Campaign Against Foreign Control of Aotearoa (CAFCA) has existed - more than 45 years now - we have called for the closure of the Bluff aluminium smelter, owned by giant transnational corporation, Rio Tinto. There are numerous grounds for doing so, all of which amount to the smelter not being in New Zealand's national interest. The corporate welfare power price deal (the price is still secret) by itself qualifies the smelter as the country's biggest bludger. Once again Rio Tinto is pulling the same old party trick of threatening to close down and leave the country unless it gets an even better deal than what it currently enjoys.

The conventional wisdom used to be that the smelter is bad for the country but good for Southland. Not so much now, in light of very recent events. The massive floods throughout Southland in February 2020 ran the very real risk of setting off an environmental catastrophe (not to mention a major threat to life) if the water had got into huge quantities of toxic waste stored in Mataura, which would have released ammonia gas. Fortunately, that did not happen. But neither the toxic waste nor the threat have gone away - much to the anger and fear of Mataura residents

What is this toxic waste? Some (but by no means all) media reports correctly identified it as the poetically named dross, the toxic waste product of the smelter. And why is it being stored in a closed down former papermill building right next to a river in Mataura (along with other places dotted across Southland)? Because Rio Tinto got sick of storing it onsite at Bluff and decided to outsource its disposal to a third-party company, which took it off Rio Tinto's hands in 2014 and then promptly went bust in 2016. Leaving the people of Mataura, and elsewhere in Southland, stuck with the problem.

Following the February 2020 flood in Mataura, the Gore District Council made a verbal deal with the smelter management to have the dross removed. That deal was overruled by Rio Tinto's Board. As Gore's Chief Executive Officer said: "We had a deal sealed with a good old-fashioned Southland handshake, but Rio Tinto's bosses have reneged". At which point the "transformative" Government started to wake from its stupor. Environment Minister David Parker said it was "disgraceful" and "I've had enough" and threatened to look at suing Rio Tinto.

Toxic Waste Liability Dumped On Taxpayers

Good luck with that, Minister. It would involve Labour facing up to the 2003 and 04 indemnities signed by Michael Cullen, Labour's Minister of Finance at the time, accepting that the taxpayer, and not the smelter owners, would be liable for the cost of cleaning up toxic waste produced by the smelting process. And the Government indemnity for cleaning up the Bluff smelter's toxic waste is still in place.

Our researcher wrote to us: "This is from Note 25 of the Financial Statements of the Government of New Zealand, 30 June 2019. Note 25 lists the contingent assets and liabilities. Contingent assets and liabilities do not appear in the financial statements themselves. They are not regarded as liabilities so they are not in the balance sheet. The contingent liabilities are split into two sections, those that may be quantified and those that are not quantified. The item relating to the smelter dross is among the unquantified contingent liabilities on page 219".

It lists the Party Indemnified as New Zealand Aluminium Smelters and Comalco. The Instrument of Indemnification says: "The Minister of Finance signed indemnities in November 2003 and February 2004 in respect of aluminium dross currently stored at another site in Invercargill". And the Actions Indemnified are: "Costs incurred in removing the dross and disposing of it at another site if required to do so by an appropriate authority".

Yes, that's right. Rio Tinto has outsourced the liability for cleaning up its mess onto the New Zealand taxpayer. And supine governments, both Labour and National, have gone along with that. Something to think about, heading into the election campaign. It's a textbook example of a transnational corporation privatising the profits and socialising the costs. CAFCA insists that the Government makes Rio Tinto clean up its own mess, at its own expense. And that the Government cuts short Rio Tinto's decades-long tiresome threatening to close down and assist it to do so. With a "good old-fashioned" boot up the arse.

The best explanation of the whole question of the smelter's toxic waste and who is responsible for cleaning it up is in the below extract from the Judges' Report for the 2013 Roger Award for the Worst Transnational Corporation Operating in Aotearoa/New Zealand. Rio Tinto won the Roger Award that year.

Despite having been written several years ago, this is still very timely. Once again, the transnational was threatening to close the smelter and leave the country, unless the (Key) government gave it a multi-million-dollar subsidy. Guess what happened? The Government gave the company $30 million of taxpayers' money as a bribe to stay.

"An Indemnity In The Unlikely Event"

"Aluminium smelting is known to be environmentally damaging, and for many years the waste product from smelting has been dumped in a landfill at Tiwai Point. Rio Tinto's Financial Reports have long included an amount calculated to provide the environmental restoration necessary when it finishes its activities there".

"In its analysis of the economics of the NZ aluminium smelter, the Treasury had commented on the limited public information about the smelter's 'obligations to remediate the site at Tiwai Point', noting that the closure plan to 'cover, shape and revegetate the area...is not a public document'. Treasury also noted there was a provision in New Zealand Aluminium Smelters' Financial Reports, but that 'the provision is not backed by a cash reserve and only the assets of NZAS (mostly plant) support it'".

"It is interesting to note that in 2012, the Government's Financial Reports disclosed for the first time a Government indemnity (emphasis added) issued to the 'New Zealand Aluminium Smelters and Comalco. The indemnity relates to costs incurred in removing aluminium dross and disposing of it at another site if required to do by an appropriate authority. The Minister of Finance signed the indemnity on 24 November 2003. In February 2004 a similar indemnity was signed in respect of aluminium dross currently stored at another site in Invercargill'".

"It is difficult to know what to make of this new information, other than that it implies yet more taxpayer funding of Rio Tinto's activities. Does the indemnity relate to all waste dumped in the Tiwai Point landfill over the 40 years of Rio Tinto's activities in New Zealand or does it relate only to some? Rio Tinto's Sustainability Report for 2003 makes the following comment:"

"'In December 2003, Environment Southland granted resource consent for NZAS to dispose of dross, a waste product from the aluminium production process; that had been stored in a Bluff warehouse for many years. The material originally belonged to NZAS, but was sold to a recycling company that closed suddenly in 1991'".

"The Ministry for the Environment, P&O (the owners of the warehouse) and NZAS have worked together to facilitate the movement of the dross to the NZAS landfill. NZAS has provided the landfill facility. P&O has paid for the transport and the Ministry has provided an indemnity in the unlikely event that the dross material ever has to be removed from the Tiwai landfill" (emphasis added).

"Even as it prepares to depart New Zealand, it appears that Rio Tinto is leaving a legacy of thousands of tonnes of aluminium dross deposited in the Tiwai Point landfill that it will cover and plant over but, should this turn out to be toxic and require removal, the liability to remove it has, it seems, been transferred to New Zealand's taxpayers".