Aluminium prices triple NZAS profits
HIGHER global aluminium prices have underpinned a tripling of underlying profit to $75 million for New Zealand Aluminium Smelter, at its smelter in Bluff.
The Rio Tintoowned smelter made a statutory loss of $18 million for its full year to December, but after adjusting for taxes, its underlying profit was $75 million, up from $25 million the previous year.
Outgoing NZAS chief executive Gretta Stephens said consistently higher aluminium prices during the year delivered the more favourable result for Rio Tinto.
‘‘This is a pleasing result and has given NZAS the ability to look more confidently to a commercially sustainable future,’’ Ms Stephens said in a statement.
Metal prices were almost 23% higher on average in 2017 than in 2016, which more than offset the effect of large increases in major raw material prices through 2017, she said.
In May Ms Stephens announced a new more than fouryear electricity deal with Meridian Energy, contracting an extra 50MW of power to reopen a 22yearold fourth pot line, which was mothballed six years ago.
NZAS uses about 13% of the country’s electricity output.
‘‘Having secured a power arrangement that enables us to restart our quarter potline Line 4, the team is hard at work on the restart project,’’ Ms Stephens said.
The pot line was expected to be operational by the end of the year and is expected to boost overall aluminium production by 9%.
In 2017 the smelter produced 337,016 tonnes of metal, 0.5% less than 2016.
However, Ms Stephens cautioned that predictions for the aluminium market in 2018 were for price volatility, which NZAS was vulnerable to, and movements in the New Zealand dollar against the US dollar.
‘‘This is because we continue to pay one of the highest prices for delivered power for a smelter anywhere in the world,’’ she said.
She noted NZAS’ 2017 transmission costs of $72 million for the calendar year were just $3 million less than NZAS’ underlying profit.
‘‘Unfortunately, an unintended consequence of restarting line 4 is that NZAS transmission costs will increase by around another $6 million per year, despite there being no change in the transmission infrastructure the smelter uses,’’ Ms Stephens said.