We should have known better, based on many decades of experience. When Rio Tinto announced in 2020 that it would shut its Bluff aluminium smelter in August 2021, we were among very many organisations and people who ejaculated for joy (Watchdog 154, August 2020, "Good Riddance To NZ's Biggest Bludger. And Take Your Bad Rubbish With You", Murray Horton). Alas, - if you'll pardon the expression - it was a premature ejaculation.

Rio Tinto are far too cunning to just pack up and go (indeed, they're as cunning as the old proverbial). This, after all, is the transnational corporate recidivist, which has twisted Governments, both National and Labour, around its little finger for more than half a century. Threatening to pack up and go is just a standard negotiation tactic for it, one that it has employed on several previous occasions (although never before now with an actual closure date tossed in).

The threat worked - as it always has - and the politicians came running. It was made before the 2020 election so, naturally, it became an election issue. The unlamented New Zealand First made a beeline for Southland to pledge undying fealty to the smelter. It didn't save Winston Peters' bacon (nor did anything else, for that matter). More significantly, Labour Ministers and MPs flocked to the Tory heartland of Southland (whose electorates stayed resolutely National in the face of the Labour landslide). And they promised to keep the smelter open for another few years, to facilitate a transition period.

Four More Years

Lo and behold, in January 2021, it was announced that Rio Tinto and its power supplier, Meridian, had reached a new electricity agreement that will keep the smelter open until the end of 2024. Think about that timing for a minute. 2024 pushes the "closure" out past one more election (2023), one more opportunity to threaten and cajole the Government into making more concessions to Rio Tinto, one more chance for NZ's biggest bludger to suck up all the corporate welfare on offer, one more chance to see if an even more malleable Government is elected which will provide even easier pickings.

There was much talk from the Government about this extension giving Rio Tinto more of a chance to clean up its toxic waste. Who will do that and what it will cost are still very much up in the air. In December 2020 it was reported that New Zealand Aluminium Smelters (NZAS, the subsidiary company which operates the smelter) had set aside $298 million for rehabilitation but that the real cost was unknown (Stuff, 20/12/20, "Smelter Rehabilitation Costs May Not Be Known For At Least A Year").

The new deal with Meridian - Rio Tinto had wanted its power bill cut by about a third - is separate from any new agreement with State-owned Transpower to carry that electricity to the smelter. That deal has not yet been sewn up but it has been reported that Rio Tinto wanted that bill cut by roughly half. The Government has bent over backwards to accommodate Rio Tinto with this one.

"The plan seemed to be that the Government would ask Transpower to cut the smelter a deal, and accept a lower dividend from Transpower so as not to increase prices for other electricity users. It was that concession that seemed to put the final piece of the jigsaw in place for the smelter's reprieve" (Stuff, 14/1/21, "Aluminium Smelter Deal - Who Caved?").

And Rio Tinto got its Christmas present from Meridian. "Rio Tinto managed to beat down the price it pays to power the Tiwai Point aluminium smelter by more than a third, from about 5.5 cents per kilowatt hour to about 3.5c/kWh, Forsyth Barr believes.... A price of 3.5kWh/hour would mean the smelter was paying only about 12% of the standard rate of 29/kWh that Meridian charges residential customers for power".

"Forsyth Barr forecast Rio Tinto would seek to extend the power contract in 18 to 30 months' time" (Stuff, 15/1/21, "Broker Believes Tiwai Smelter Beat Down Meridian On Power Price By 36%").

"A Very Profitable Smelter Now"

Meridian then signalled the next, and entirely predictable, step in this whole sad saga. Its Chief Executive Officer Neil Barclay "agreed it was 'entirely possible' the smelter would approach Meridian 'and want to extend... They are more than likely to want to engage at some point, particularly if aluminium prices hold up the way they are - it is a very profitable smelter now', he said"

"...Meridian's comments about the profitability of the smelter may raise questions over whether and why the Government might still be prepared to offer the smelter a separate discount on the transmission charges it pays to Transpower" (Stuff, 18/1/21, "'It's A Very Profitable Smelter Now', Meridian Boss Says After Price Beat-Down").

This pattern of threat and blackmail has been, and still is, Rio Tinto's modus operandi wherever it is in the world. In February 2021 it was announced that it had struck a more favourable deal with its Icelandic power supplier, meaning that it will keep its aluminium smelter open in that country, despite having earlier threatened to close it (sound familiar?). Media commented on the similarity between the situation in New Zealand and Iceland. This is the way transnational corporations act - picking off countries one by one.

Toxic Waste

At least one thing has been sorted out, namely getting rid of thousands of tonnes of the smelter's toxic waste from where it has been stored in the flood-prone old Mataura paper mill, which is right next to the Mataura River. 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 that toxic waste stored, which would have released ammonia gas. Fortunately, that did not happen.

The Environmental Defence Society (EDS) took action in the Environment Court to determine who owned the waste (the smelter had outsourced it to a private company, which had gone bust, and the waste had sat in Mataura for years). In February 2021 the Court announced that agreement had been reached and the waste would be taken back to the smelter site for storage.

EDS Chief Executive Gary Taylor said: "This was a complex negotiation that was time consuming and challenging. While it's our position that a small environmental group like EDS should not have been required to take on the biggest mining company in the world to see it face up to its environmental responsibilities, we are pleased with the outcome".

Former New Zealand First MP Mark Patterson, who had campaigned to get rid of the waste, said: "I could never help but think if this had been in the middle of Wellington it would have been gone years ago". The agreement made clear that it only applies to smelter toxic waste stored in Mataura, not in other sites in Southland (Stuff, 2/2/21, "It's Finally Going .... Mataura To Be Rid Of Hazardous Substance").

There is one key word buried in that article. "The Crown has provided an indemnity to NZAS for certain losses it could incur through the storage of the material". The Government, whether National or Labour, has continuously indemnified the smelter owners against the costs of cleaning up the smelter site when, or indeed, if it closes. It's one of the shabbiest of the smelter's shabby secrets.

"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" (Watchdog 154, August 2020, "Toxic Waste Dumped On Taxpayers", Murray Horton).

But the 8,000 tonnes of toxic waste being moved out of Mataura fades into insignificance in comparison with the more than 100,000 tonnes of a different kind of cyanide-laced toxic waste that the company has stockpiled on the smelter site, less than 100 metres from a rapidly eroding Southland beach. The smelter company won't reveal its plans for this waste.

The Government says it is "'completely blind' about what contamination the closure of the smelter at Tiwai Point might leave behind" (NZ Herald, 21/2/21, "Tiwai Point Smelter Stockpiles 100,000 Tonnes Of Hazardous Waste Near Bluff Beach"). That's reassuring, isn't it.

A Liability, Not An Asset

For as long as CAFCA has existed - 45+ years - we have called for the closure of the Bluff smelter. The reasons why we called for its closure have never changed - it is a transnational corporate ripoff, the biggest bludger in New Zealand. It is a liability to New Zealand, not an asset. The smelter is the country's single biggest user of electricity, consuming nearly one sixth of the total, 24/7 for nearly 50 years. It pays a top secret super cheap price that is not available for any other user and all it does is export electricity from NZ in the form of aluminium, while being subsidised by all other electricity users. The smelter is the textbook example of corporate welfare in New Zealand.

It has been receiving a massive taxpayer subsidy continuously for nearly 50 years, in the form of the Manapouri Power Station built with public money for its exclusive use (and let's never forget that a number of men died building that); and the cheapest and most secret power price rate in the country bar none. And to add insult to injury, it dumps its toxic waste onto the people of Southland and has wrangled a deal from the Government whereby the taxpayer pays for cleaning it up. It is long past time this transnational corporate criminal was closed for good.