Waste will be dealt with, smelter says

The owners of the aluminium smelter company at Tiwai Point in Southland have confirmed they are committed to cleaning up hazardous waste from the site, after official documents show they rejected a direct payment from the Government to help.

The smelter company, New Zealand Aluminium Smelters (NZAS), said in a statement that it remained ‘‘committed to closing the smelter in a responsible manner including removing all spent cell lining from the site’’.

NZAS decided last year to extend its stay in Bluff until 2024, but there are fears the company could leave without adequately disposing of dangerous dross and other waste materials.

Documents newly released under the Official Information Act show a Government payment of between $15 million and $35m to the smelter company was at one point discussed by officials as an opening offer.

The payment would have been contingent on the smelter spending more than the $300 million it has currently set aside to clean up the smelter site after its closure, and would have been tied to the smelter staying open until 2024.

An offer for what the Government called the ‘‘Southland Transition Bond’’ was made in November.

But correspondence released under the act states that the smelter company’s owners, Rio Tinto and Sumitomo Corporation, rejected the proposal.

‘‘Unfortunately, Rio Tinto and Sumitomo have declined to make any substantive remediation commitments prior to the finalisation of a preliminary disclosure plan next year, and has rejected the Government’s proposal of a bond payment linked to remediation, without tabling any alternative suggestions,’’ an email from Treasury commercial performance manager Maureena van der Lem to Rio Tinto’s general manager of energy, Andrew Horvat, stated in December.

Rio Tinto has been seeking help from the Government to slash the electricity transmission fees it pays Transpower. This appears to have been its preferred form of assistance from the Government.

An NZAS spokeswoman said the company recognised ‘‘the importance of maintaining a positive, collaborative working relationship’’ with the Government and Southland’s community.

She reiterated that the smelter was not seeking a subsidy from the Government but did want ‘‘a fair price’’ for transmission costs.

‘‘We have committed to operating with greater transparency, and will continue to release information as our closure study progresses and information becomes available.’’

Ministers broke off negotiations this year, after Rio Tinto accepted an offer of cheaper electricity from Meridian Energy to keep the smelter open until at least the end of 2024.

But a question mark appears to hang over the specific assurances Rio Tinto will provide to clean up the site once the smelter does close, the documents suggest.

A Treasury report in February said it remained an ‘‘open question whether New Zealand Aluminium Smelters will ever make adequate and meaningful information available to enable the Crown to make an accurate assessment of the true extent of the remediation requirements, their likely cost, and NZAS’s minimum legal requirements’’.

It was uncertain if the smelter would close in 2024, the Treasury said.

‘‘By that time, it is anticipated that transmission infrastructure enhancements will significantly reduce NZAS’s bargaining power with Meridian,’’ its advice stated.

‘‘This will further strengthen the Crown’s bargaining position and may enable the Crown to seek additional commitments from the smelter if any potential agreement,’’ it said.

The Treasury said the new power deal the smelter accepted from Meridian in January meant its underlying profitability would be ‘‘robust’’, unless there was a significant fall in aluminium prices.

The documents suggest officials were never in much doubt the offer from Meridian was going to be enough to persuade Rio Tinto to keep the smelter open until 2024.

‘‘While the economics of Tiwai Point are likely to look more challenging in 2024, it remains possible that NZAS may be able to continue operations past this point,’’ officials said.

‘‘Presumably part of the value Rio Tinto places on transmission relief includes an expectation that it will continue past 2024 and be ‘baked in’ for future operations,’’ they said.

‘‘We have committed to operating with greater transparency, and will continue to release information as our closure study progresses and information becomes available.’’ NZAS spokeswoman