The smelter’s immediate future was secured through the signing of an electricity agreement between New Zealand Aluminium Smelters and Meridian Energy after 12 months of negotiations.
The deal came after the Government gave the smelter a $30 million one-off payment.
NZAS chairman Brian Cooper said the previous electricity contract had included price increases which threatened the future of the smelter in the face of falling aluminium prices and the strong New Zealand dollar.
The new deal is until 2030, but the smelter can terminate the deal from January 2017 if it gives 15 months’ notice.
“The clouds have lifted over Invercargill today, both literally and metaphorically,” Cooper said, alluding to the fact the smelter would remain open for at least three more years. . .
The Opposition which has been calling for the government ‘to do something’ is of course critical of the deal but Finance Minister Bill English explains:
“This is a one-off incentive payment to help secure agreement on the revised contract because of the importance of the smelter to the stability of the New Zealand electricity market,” Mr English says. “It provides medium term certainty for Southland and New Zealand.”
This deal protects jobs in the short term.
It is also a $30 million counter to claims from the opposition that the government doesn’t care about the regions.