I see aluminium prices are currently at their lowest in 3 years and on a steep downward trajectory... wonder if this and the current economic crisis will be the catalyst for Rio Tinto pulling the plug so to speak on Tiwai
Printable View
I see aluminium prices are currently at their lowest in 3 years and on a steep downward trajectory... wonder if this and the current economic crisis will be the catalyst for Rio Tinto pulling the plug so to speak on Tiwai
Yes, but if you convert them to NZD then they are not much different to 6 months ago. I am sceptical that Rio would change their decision of staying open/closing due to COVID19. They would have largely already made up their mind prior to the outbreak. One theory I heard recently is that they will announce closure but just to get more leverage with the power companies for a better deal then later this year they will reverse their decision and stay open. Pretty risky strategy though. If they didn't already have enough of the general population against them, this would cement them as public enemy #1.
according to industry
More smelters announce possible closure due to high power costs
Pacific Aluminum, a division of Rio Tinto Group, recently reported a loss due to high power and transmission costs at its Tiwai Point aluminum smelter in New Zealand, according to industry reports.
The company noted rising power costs were more harmful than weak aluminum prices, which dropped by around 15% last year.
The company previously announced it would make a decision on whether to keep the smelter operating by the end of March 2020.
Australian operations face similar issues.
According to a recent report from the Institute for Energy Economics and Financial Analysis, Australia’s four major aluminum smelters all face critical power issues that could result in closures.
aluminium at new lows today in US dollars
Coronavirus is double shock for China's giant aluminium sector
https://www.reuters.com/article/chin...-idUSL8N2AL4O8
Aluminium producer Norsk Hydro says coronavirus will likely impact demand, activities
https://www.nasdaq.com/articles/alum...ctivities-2020
will the lower dollar and power company subsidies ( if they do it ) be enough to keep tiwai open against the backdrop of lower world demand. Rio is due to announce soon there decision.
No doubt an impossible question to answer, but if Tiwai does close then how much more could it knock off the current prices? They are starting to look pretty beat up, and could closure already be partly built in?
We would all be winners , just as with the reduced prices at the pump due to less oil demand . If they toss the toys out of the cot and go home , we can distribute that power
to NZ consumers at maybe 14 cents a unit instead of the 18-23 odd we all pay now . Rumour has it Rio was maybe paying 5 cents a unit , so its a win ,win.
I've got a friend fairly high up in Meridian, so I've got an insight to this.
Essentially from what I understand, Rio want to negotiate now, whilst they still have leverage. Their operation here is profitable (note: pre this disaster), and is 'eco friendly' so what they are saying is largely bluster.
At the moment the hydro station is connected directly to tiwai, and not anywhere else. There is a 2 year programme to link it to the main grid, which will then have dual power supplies north and be great to the country.
So if Rio walk away, Meridian take a 2 year max hit which is very doable for them in what is a highly profitable period. Rio know this and are trying to lock something in while they still have some power ( yay pun!)