I am expecting broker downgrades right across the sector and have been expecting this announcement for some time. One wonders whether many (any ?), in this sector can maintain their dividends ?
Have locked in the MEL bounce just in case - Money in the hand...
All science is either Physics or stamp collecting - Ernest Rutherford
Tiwai closing is the best thing for all the electricity companies and NZ You cannot sell a product below cost and that is what was happening with Tiwai if their was further reductions.
Tiwai closing is the best thing for all the electricity companies and NZ You cannot sell a product below cost and that is what was happening with Tiwai if their was further reductions.
Aptly put, short term there may be few issues but longer term its beneficial.
I remember hearing that the funds for site remediation were put into some sort of escrow when they built the place, and that remediation was a condition of the plant closing. It's actually quite a picturesque place with the exception of the plant itself and the access road to Tiwai is a nature reserve. Maybe there is some potential for a tourism operation there
Aptly put, short term there may be few issues but longer term its beneficial.
The few issues may include the $50m million pa lost in transmission fees from Tiwai plus a multiple of this to build new transmission lines .
Power prices may actually go up in the North Island-I do not know .
Would appreciate Jantars opinion
Correction to my last, there are no funds put aside, but the remediation costs are backed by site assets as attached:
"NZAS’s financial statements include a provision for rehabilitation and closure of $226.8
million as at 31 December 2011. Meridian has tested this figure with external parties
and it is seen to be a reasonable estimate of what likely closure and remediation costs
would be. However, this provision is not backed by a cash reserve and only the assets
of NZAS (mostly plant) support it." - from a Treasury release dated September 2013
Believe me Tiwai use transmission assets at Dunedin, North Makerawa , and lines from Twizel to Invercargill at least. The story they are putting out is false . They deliver no benefit to NZ and should have been gone years ago. The price they get energy for is cost and they cannot exist on Manapouri generation alone.
The changing face of the mayor of our Southernmost city
Morning of 8th July: Tim Shadbolt
Morning of 9th July: Tim Sadbolt
I have to admit I am surprised that Rio have pulled the plug on Tiwai. I really though that the 'purest aluminium in the world' would ensure the premium price needed to keep the smelter viable. I guess the global outlook for aerospace just isn't so rosy at the moment...…
Still at least my 'value buying approach' has seen that I have not kept chasing up buying those power shares to ridiculous prices. I will have to look at the value equation again now. But my gut feeling is 'we aren't quite there yet'.
SNOOPY
Last edited by Snoopy; 09-07-2020 at 06:58 PM.
Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7
It would be interesting if you had the time and could access financial statements for Tiwai Point to see if they are paying fair prices for their other inputs. Rio Tinto would be providing the Bauxite (I guess) I don't suppose they would be using transfer pricing to take profits offshore. What about debt, do they have any? is thin capitalisation an issue. I guess pointless now but if you had the time it would be interesting to know. I'm sure if that were the case someone would have brought it up by now while they debate the price of power.
Originally Posted by Beagle
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