TOXIC WASTE LIABILITY DUMPED ON TAXPAYERS
- Murray Horton
This is an extract from an article in Watchdog 153, April 2020. It fleshes out and provides the context for the preceding article from Sort Out The Dross. Ed.
CAFCA's 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. 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.
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 National) 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. CAFCA congratulates the present Government for refusing to do likewise in 2020.
"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".