Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Tiwai Point well-positioned in Trump roiled aluminium market


By Gavin Evans

Dec. 7 (BusinessDesk) - Heightened political risk in the global aluminium market may play to New Zealand’s advantage, Rio Tinto executive Kellie Parker says.

The tariffs the US imposed on aluminium imports this year, followed by the sanctions it took against Rusal and its senior executives, had highlighted sovereign risk in the industry, she told BusinessDesk.

The Tiwai Point smelter not only has recognised technical capability, it also operates in a stable political and regulatory environment, she said.

“New Zealand is actually in a great position to be differentiated in that market.”

Parker, chief operating officer of Rio Tinto’s aluminium operations in the Pacific, was speaking after a function marking the restart of Tiwai Point’s fourth potline after a six-year shutdown.

More than 100 guests from contracting firms, customers, government and part-owner Sumitomo Chemical attended. Prime Minister Jacinda Ardern noted that about 3 percent of the site’s production had been caught by the “pesky” US tariff.

General manager Stewart Hamilton said a recent visit to Japan highlighted to him the smelter’s sovereign risk advantage. Four of the firm’s biggest customers there cited that low risk, the high purity of its production, and the smelter’s low-carbon footprint as reasons to prefer its output.

The sanctions the Trump administration imposed on Rusal – the world’s second-largest aluminium producer - caused prices to soar to more than US$2,600 a tonne in April. But Rusal’s supply and joint-venture arrangements with other suppliers – including Rio Tinto – meant the ban also disrupted deliveries with force majeure declared on many contracts around the world involving the Russian business.

The sanctions also added fuel to the fire in alumina markets, where prices have been high all year due to production cuts in Brazil, strikes in Australia and environmental curtailment in China.

Alumina – refined from Bauxite for smelting into aluminium – was trading at more than US$500 a tonne last month.

Yesterday marked a “big day” for New Zealand Aluminium Smelters; the 45 staff it took on for the restart and for new orders means it now employs about 900 people.

But Hamilton said markets are still tough. The lower New Zealand dollar has helped, but alumina costs remain high and metal prices have also come off in recent months.

Aluminium was selling for US$1,966 a tonne on the London Metal Exchange mid-week. It fell below US$1,500 in late 2015 and had been around US$2,258 when Rio Tinto announced the restart of line four in May.

The New Zealand dollar was recently buying 69 US cents, down from as much as 88 cents in July 2014.

Tiwai Point used to run line four opportunistically, paying spot power prices when they were attractive. But the heightened volatility in metal, power and alumina prices in recent years – and in the New Zealand dollar – now makes that too risky.

Hence the four-year, 50 MW power supply agreement it secured with Meridian Energy.

Hamilton said that, relative to the rest of the global industry, Tiwai Point’s power costs are still high. That means it has to focus on high-purity, high-value products. Much of its production goes into high-end electronics.

Hamilton said the company is looking at a couple of new products and in May started producing a new rolling block for car makers in Asia.

Sheet aluminium for car bodies was previously aimed more at high-end car makers but manufacturers in Japan and South-East Asia are seeking it for more mainstream models, he said. The new alloy could account for 45,000 tonnes a year, he said. The site produced about 337,000 tonnes last year.

Tiwai Point’s production is already marketed under Rio’s two-year-old RenewAl brand, the first certified low-carbon aluminium. Each branded tonne produced less than four tonnes of CO2 – about a third of the industry average.

Hamilton said that provides a small premium – about US$34 a tonne – but more importantly helps differentiate the firm’s metal in the market.

Next year the smelter will seek certification under the Aluminium Stewardship Initiative.

In April, Rio Tinto was the first to achieve the supply-chain certification for its hydro-powered operations in Quebec. It covers the five aluminium smelters there, the Vaudreuil alumina refinery, casting centres, power, port and rail operations and the Gove bauxite mine in Australia’s Northern Territory.

Hamilton said achieving certification, which also covers broader sustainability measures like regional employment and stakeholder involvement, is expected to take the first half of 2019.

Parker said RenewAl had helped brand the firm’s low-carbon production in the corporate market. ASI certification should help do the same in the consumer market.

Many householders want to live in a more sustainable world, she said, but aren’t aware of the potential issues in the supply chain of aluminium. That goes beyond energy supply and includes how bauxite is mined, and how the alumina is refined.

“We want to be able to differentiate ourselves with that.”

(BusinessDesk)

ends

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Government: New Year Border Exception For Seasonal Workers In The Horticulture And Wine Industries

2000 additional RSE workers to enter New Zealand early next year employers must pay these workers at least $22.10 an hour employers will cover costs of managed isolation for the RSE workers RSE workers will be paid the equivalent of 30 hours work a week ... More>>

ALSO:

Grey Power: Is Disappointed To Learn Of More Bank Closures

Many older people are being left without essential services because of cost cutting and the march of modern technology. It is now expected that most banking transactions can occur via the internet or telephone. Jan Pentecost, President of the Grey Power ... More>>

ALSO:

Economy: Supply Chain On Brink Of Overload Says National Road Carriers

The New Zealand supply chain is on the brink of overload and it looks like the upcoming peak imports season may push it over the edge says National Road Carriers Association (NRC) CEO David Aitken. “Worldwide supply chains are in disarray,” says Mr Aitken. ... More>>

Stats NZ: Annual Goods Trade Surplus At 28-Year High

New Zealand’s annual goods trade surplus reached a 28-year high of $2.2 billion as imports tumbled in the year ended October 2020, Stats NZ said today. “This is the largest annual surplus since the July 1992 year, driven mainly by much lower ... More>>

ComCom: How Real Is That Bargain?

The Commerce Commission urges retailers and consumers to think hard about the bargains being offered as ‘Black Friday’ and Christmas draw near. Black Friday has now overtaken Boxing Day in terms of retail spending, according to data from electronic ... More>>

Stats NZ: Births And Deaths: Year Ended September 2020

Births and deaths releases provide statistics on the number of births and deaths registered in New Zealand, and selected fertility and mortality rates. Key facts For the year ended September 2020: 57,753 live births and 32,670 deaths ... More>>

ALSO:


Forest & Bird: Kākāpō Wins Bird Of The Year 2020

The nation has voted and Aotearoa New Zealand has a new Bird of the Year. New Zealand’s moss-colored flightless parrot has climbed to the top-spot for the second time in Forest & Bird’s annual Te Manu Rongonui o Te Tau/Bird of the Year competition. ... More>>