Smelter rehabilitation real costs unknown

New Zealand Aluminium Smelters [NZAS] has set aside $298 million as a provision in its accounts for the closure and rehabilitation of its Tiwai plant – but the real cost is unknown.

There is an obligation to put the accounting provision in place for the future expense, but the $298m figure is an accounting estimate only.

Stuff understands the actual cost of the closure and rehabilitation work on the site will be determined by a closure study process currently being undertaken by Rio Tinto, the majority smelter owner.

It is understood the first phase of the closure study has commenced, but will not be completed until late next year.

The issue of site rehabilitation is a sticking point in negotiations between Rio Tinto and the Government around the future of the smelter. Rio Tinto announced in July it would close the plant, which hires 1000 people, in August 2021.

But the Government is currently negotiating with the company to try to keep it open for another three to five years so the Southland economy has time to transition to other industries.

No decision has yet been made, though Rio Tinto has said it wants a decision on the plant’s future made before Christmas.

Deputy prime minister Grant

Robertson, when in Invercargill on December 11, said both parties wanted different things in the negotiations.

The electricity transmission costs were important to Rio, while the remediation of the site was important to the Government.

‘‘It’s the coming together of [the two] that will be the agreement,’’ Robertson said.

The Government wanted commitments around remediation, he said.

Rio Tinto did not respond to

questions on Friday.

Nga¯i Tahu also has concerns, with representatives to speak to Tiwai management today.

Kaumatua Michael Skerrett said Nga¯i Tahu wanted an assurance from Rio Tinto that it would fully remediate the smelter site when it closed the plant.

He understood there was some ‘‘toxic’’ waste by-product at the plant, so he wanted Environment Southland to get onsite, make a proper assessment and come to an agreement with Rio Tinto about what was required for the remediation work.

He was concerned erosion could result in any toxic material getting into the harbour if the site was not fully remediated.

‘‘We are very staunch on the remediation and ensuring we don’t have the toxic stuff wrecking our harbour and fisheries,’’ Skerrett said.

‘‘It’s an important site for us, there’s a lot of archaeological sites there.’’

New Zealand Aluminium

Smelter chief executive Stew Hamilton said in a written statement: ‘‘We are proud of our long-standing relationship with Te Ao Marama and recognise Nga¯i Tahu as mana whenua of Tiwai Point, and we look forward to continue working with them on our closure planning process.’’

Environment Southland chairman Nicol Horrell confirmed the Government had asked it to determine the amount of environmental remediation required at the smelter site.

Rio Tinto has said it wants a decision on the plant’s future made before Christmas.