MEL - Meridian Energy

[Daytr]

Here's a thought, could the power companies get together & buy it?
It could end up a bit like Marsden Point with all the stakeholders or in this case electricity suppliers owning a share.

[Zaphod]

Zaphod, "The degree to which it would create an economic stimulus is extremely debatable."
I think we will have to agree to disagree on that one. haha.

LOL! Well, at the risk of derailing this thread for many pages we'll move on, it’s not important

[Zaphod]

Here's a thought, could the power companies get together & buy it?
It could end up a bit like Marsden Point with all the stakeholders or in this case electricity suppliers owning a share.

It'd certainly provide an interesting value-add for the generators (I assume you'd also include retailers?) and potentially provide them with some additional revenue, however it would expose them to significant additional risk and could have the potential to distract them from their core business.

Depending on the price it is sold for, anything's possible. But I imagine Rio will want to extract maximum value from it, given their current modus operandi.

[Daytr]

With $500M of liability Rio might sell it for a buck. Similar to what Branson did with the Chunnel when it was loaded with debt.

[Crackity]

With $500M of liability Rio might sell it for a buck. Similar to what Branson did with the Chunnel when it was loaded with debt.

Daytr - that entire statement gets a LOL - �� - suggest you check your facts for both statements - no personal offence intended

[bull....]

Alcoa reported last night in the us not flash aluminium premiums and prices collapsed last quarter they say china exporting so much aluminium fllooding the market so prices could weaken further but forecast demand as steady although they say cost of production is loss making in some cases because of low prices

[Hoop]

Alcoa reported last night in the us not flash aluminium premiums and prices collapsed last quarter they say china exporting so much aluminium fllooding the market so prices could weaken further but forecast demand as steady although they say cost of production is loss making in some cases because of low prices

[xafalcon]

Here's a thought, could the power companies get together & buy it?
It could end up a bit like Marsden Point with all the stakeholders or in this case electricity suppliers owning a share.

Comcom would not allow this, because the politicians would wear the combined fury of the domestic and business consumers.

Just imagine if the power companies (and maybe transpower) all got together (formally or informally) and took ownership. Then they decided that to make some money from aluminium they had sell power to Tiwai at 1 cent per unit. What would that do to other commercial and domestic unit prices? This would make the smelter very cost competitive, so more pot lines may be added. Prices for other users then go even higher.....

The comparison with Marsden Pt is flawed.

Marsden refines product for it's owners to sell, and if Marsden Pt isn't competitive then more refined fuel is imported.

Tiwai Pt owned by power companies would be incentivised to reduce power cost to the smelter and crank up the cost for other users

[bull....]

aluminium hit new low 1661 looks like headed lower.

wonder how much this affects rio decision? of course if they close good for meridian not good for others

[sb9]

From NBR online y'day....highlighted the important bit in the middle...

No more govt sweeteners to keep Tiwai Point open, Key says
The foreign owners of the Tiwai Point aluminium smelter have had discussions with Finance Minister Bill English about further sweeteners to keep the New Zealand's most energy-intensive industrial plant open and been told there is no scope for further assistance, says Prime Minister John Key.
The smelter's majority owner, Anglo-Australian metals giant Rio Tinto, wrung $30 million in cash out of the government in 2013 when it forced its electricity supplier, Meridian Energy [NZX:MEL], to cut the price of electricity to the smelter following a collapse in global metal prices after the global financial crisis, using the government's desire to partially privatise Meridian as a bargaining chip to gain both the lower power price and the additional taxpayer-funded sweetener.
It pushed for a $60 million payment, which the government refused, and announced a new contract with Meridian with a trigger date of July 1, 2015 for a decision on whether to keep the plant, which uses one-seventh of the country's total electricity production, open or to close it in 2017.
That deadline was extended late last month to Aug. 3. Energy industry analysts spoken to today by BusinessDesk believe Rio Tinto and its minority shareholder in the smelter, Sumitomo of Japan, will keep the plant open but may opt to drop 172 Megawatts of the 572 MW available to it under the contracts renegotiated in 2013.
Meridian is seeking to stitch together a deal that could see Contact Energy, Genesis Energy and possibly Todd Energy in a supporting role, stumping up the 172MW that, if Meridian is to supply it, will be more expensive than the deal struck two years ago.
The smelter is a major employer in Southland and has invested heavily in more efficient technology and processes, but still struggles for profitability amid low metal prices and over-supply from newer, lower cost Chinese smelters. The lower New Zealand dollar exchange rate is expected to improve its prospects and the current owners are looking for a buyer.
Whoever owns the smelter would be liable for perhaps $400 million in site remediation costs if they closed the smelter, meaning Rio Tinto may prefer to run it at a loss than to face the up-front costs of the clean-up required if the smelter closes.
"I know that there have been discussions between the Minister of Finance's office and the company indicating that the government wasn't prepared to put any more resources in," Key told his weekly press conference.
He stood by the decision to make a direct cash grant to the smelter at "a very vulnerable time...but the government isn't interested in putting another cash injection in."
There had been no discussion about other kinds of inducements to convince the smelter owners to keep the plant open, said Key.