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The ongoing operation of the Tiwai smelter could enable an affordable, secure and sustainable net-zero carbon energy system in New Zealand, NZAS chief executive Chris Blenkiron told a major energy and innovation seminar in Invercargill on Wednesday.
Uncertainty about the smelter’s future beyond the end of 2024 was lamented time and again during the two-day Murihiku Regeneration wānanga, and Energy and Resources Minister Megan Wood called for the smelter owner Rio Tinto to signal its long-term commitment by underwriting new-build renewable generation and reaching power supply deals to helping smooth national power peaks.
When it came time for Rio Tinto/NZAS response, Blenkiron encouraged the planners to see the benefits of a future with the smelter in it.
New Zealand already produced the lowest-carbon, highest-purity aluminium in the world, and had a pathway to becoming one of the earliest zero-carbon smelters, he said.
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He acknowledged the impact that uncertainty was having on the community, the energy sector, national discussion and – most personally and importantly for him – on the 1000 smelter staff.
But part of the reason why the power supply negotiations were proving long and complex was that NZAS was planning far ahead.
“We want to be here. And we want to be here for the long term. We are talking of contracts in excess of 15 years.’’ he said.
Unlike past years, when it dealt solely with Meridian, this time it was dealing with multiple generation companies because the Electricity Authority (EA) had made it clear that it wanted NZAS to run a market process.
It was like trying to buy a house that had five different owners and those five people were not allowed to talk to one another.
“It’s not just us, I would argue, who need to keep moving things along. I can’t negotiate with myself in the mirror.’’
Referring to Woods’ challenge, he said NZAS and Meridian had announced in April a conditional demand response agreement for 2023-24.
Subject to EA approval, it meant the company would reduce consumption by 50MW at times of hydro shortage or when the electricity system was under stress during winter peak periods or during generation or transmission problems.
It could already react within minutes to such calls and was looking at technology for “how we can go deeper for longer’’ when needed.
Longer-term measures, spanning from days to months at a time, in response to broader dry year issues would be built into any new agreements.
Not only was NZAS interested in partnering with new renewable energy projects, but its parent company Rio Tinto’s AAA credit rating would bring the capital cost of those projects down considerably.
Ongoing operation of the smelter, combined with additional energy generation would in turn provide the opportunity to grow green industry.
Blenkiron said it “breaks my heart, a little bit’’ that the plant’s carbon story was not better understood.
He said the recently announced deal between NZ Steel and the Government should be celebrated but “when we’re talking about that being the biggest decarbonisation project the country’s (seen) … maybe that’s the case, but it’s only marginally better than what we did in the 1990s”.
In the early ’90s the smelter produced 4 tonnes of carbon for every tonne of aluminium, but through an intensive project that decade it more than halved those emissions, which were now around 2 tonnes, compared to a global average of 12 to 13 tonnes.
“It is very safe to say that in the event of a Tiwai closure – and I’m hopeful that’s a long way into the future – global emissions goes up significantly.’’
Blenkiron repeatedly highlighted that significant progress had been made on the remediation of the Tiwai site and the process would continue irrespective of the smelter’s future.
Tiwai was already the cleanest producer of top quality aluminium on the planet, but RioTinto was also working on a carbon free aluminium process, called Elysis, in Canada.
“It’s not commercial yet, but we are further advanced than any other company in the world on zero carbon aluminium,’’ he said.
The technology looked to be about two years away from commercialisation, after which the supply chain would need to be built up.
If Tiwai was still operating when it became available, the smelter would be well-placed to adopt it.
Rio Tinto maintained that the most difficult things to find for aluminium smelting were green energy, a suitable port, and a passionate workforce who knew what they were doing.
“And that’s what we’ve got here,’’ he said.