Contact Energy - CEN Chart

[dreamcatcher]

Blackrock increasing their holding to 12.2% SP now almost back to highs of OCT......flicked a few but holding balance for divvies

[Snoopy]

My word. What’s up with Contact?

Blackrock increasing their holding to 12.2% SP now almost back to highs of OCT......

Price rise makes no sense to me. But since it is a US based international player like Blackrock, I will guess they are betting on a stronger NZ dollar, and using a boring utility like Contact as a 'proxy entity' they do not believe will move against them, once a smelter deal is confirmed with our Labour government.

SNOOPY

[Waltzing]

"thin air capital"

A good description for an industry where global warming is a potential factor in asset prices.

A simple expression of a complex modelling problem. Calculating the future value of assets when global and local macro events are factored into a business.

[850man]

Price rise makes no sense to me. But since it is Blackrock, I will guess they are betting on a stronger NZ dollar, and using a boring utility like Contact as a 'proxy entity' they do not believe will move against them, once a smelter deal is confirmed with our Labour government.

SNOOPY

"If" the smelter deal is done. Even if it is, it will be a bit like a dentist filling a tooth that really needs to come out. It's going to go in the end

[Snoopy]

"thin air capital"

A good description for an industry where global warming is a potential factor in asset prices.

A simple expression of a complex modelling problem. Calculating the future value of assets when global and local macro events are factored into a business.

"If" the smelter deal is done. Even if it is, it will be a bit like a dentist filling a tooth that really needs to come out. It's going to go in the end.

Industrial plants do have a finite life as, no matter how well the plant has been operated, after fifty years or so, you probably would not design Tiwai Point to operate in the exactly way it does today. But I regard the closing of Tiwai point as a 'greenwash' exercise. Particularly so when aluminium looks to be a very useful commodity -globally- going forwards. And the plan is to replace Tiwai with a new coal fired plant in Indonesia, where a policy of

"Environmental standards, what's that?"

applies. From a global perspective, it makes no sense at all to shut Tiwai down. Better to rebuild it with the latest technology so it is good for another 50 years.

I looked at the reason for the rise and rise of MEL and MCY referenced in the Infratil thread

https://www.goodreturns.co.nz/articl...or+25+Dec+2020

They say a large part in the rise in the share price of those two is related to ESG investor funds discovering them. But Contact is phasing out their gas powered power production. So it is only a matter of time before it is as 'green' as those two. Maybe Blackrock figured this out last week?

SNOOPY

[kiora]

Agree with you Snoopy but why bother keeping Al on?
Rio aluminum is getting price premium due to being manufactured using hydro power

BUT would the Manapouri power not be better used for proposed Data center or manufacturing green hydrogen.

https://www.nzherald.co.nz/business/...NYRFAMEWT3JWU/

https://www.stuff.co.nz/business/123...-in-the-future

Save having to build new transmission lines to NI

[Snoopy]

Agree with you Snoopy but why bother keeping Al on?
Rio aluminum is getting price premium due to being manufactured using hydro power

BUT would the Manapouri power not be better used for proposed Data center or manufacturing green hydrogen.

https://www.nzherald.co.nz/business/...NYRFAMEWT3JWU/

https://www.stuff.co.nz/business/123...-in-the-future

Save having to build new transmission lines to NI

The only problem with that suggestion is that Transpower are already upgrading the capacity of the power grid to carry that Manapouri power north. I guess that shows what they think of the likelihood of those alternative high energy industries succeeding!

SNOOPY

[Jantar]

The only problem with that suggestion is that Transpower are already upgrading the capacity of the power grid to carry that Manapouri power north. I guess that shows what they think of the likelihood of those alternative high energy industries succeeding!

SNOOPY

The upgrade was planned before Tiwai announced their intentions to close. It will increase north transfer by around 400 MW, still leaving 200 - 400 MW stranded.

[Snoopy]

The upgrade was planned before Tiwai announced their intentions to close. It will increase north transfer by around 400 MW, still leaving 200 - 400 MW stranded.

Thanks for the timing correction Jantar. I am curious why such an upgrade was approved while Tiwai was very much a going concern, with a solid track record of 25 years in business. Are you able to offer any insight on why such a Transpower upgrade would be approved, when it seemingly wasn't a priority for the previous 25 years?

SNOOPY

[kiora]

What is the best use of Manapouri power?
"Transpower has estimated it would take five to eight years and another $450m to fully "re-balance" the grid so any surplus power from Manapouri could also be efficiently distributed across the whole country."
If the power was distributed to Auckland my understanding is that there would be 50% energy loss in transmission?
https://www.stuff.co.nz/national/122...electricity-go
https://www.stuff.co.nz/business/117...island-in-2022
https://en.wikipedia.org/wiki/Nation..._(New_Zealand)
https://www.scoop.co.nz/stories/AK20...esponsibly.htm