20 May 2024
Chamber: Tiwai uncertainty leaves businesses in limbo
The ongoing uncertainty surrounding the future of the Tiwai Point Aluminium Smelter is adding to an already difficult time for Southland’s economy, a regional leader says.
Southland Business Chamber chief executive Sheree Carey said many businesses were in limbo ahead of Rio Tinto announcing whether the smelter would remain open or close.
The uncertainty lingered at a time when a deteriorating economic climate continued to make life difficult for regional economies.
“Current spending growth remains below inflation and population growth, as higher interest rates continue to bite,” Infometrics principal economist Brad Olsen said of New Zealand’s regional economy last week.
Carey said the Tiwai smelter had stated there would be a big pocket of work coming if it stayed open. As a result, businesses didn’t want to over-commit with new work or new staff until they knew the outcome.
“The confidence isn’t there at the moment to be able to take on new staff, or to tender for new jobs until they know what their workload looks like.
“So that is kind of leaving everyone in limbo, and that’s [in regards to] investment in their businesses, new machinery and everything.”
It was not just the engineering sector that was affected, Carey added.
“Everyone feels the flow-on from Tiwai.“
Olsen said the enduring challenge with Tiwai was that there was almost never certainty.
“The moment you get certainty it’s only another couple of years and the next bout starts to emerge, which is a real challenge.”
With negotiations ongoing with Rio Tinto and the power companies, Olsen said he believed there was a “viable enough case” to keep the smelter open.
“So it would be in everyone’s best interests to come to an agreement, including Rio Tinto’s, but we will let the commercial negotiations play out there.”
Rio Tinto’s external affairs director Simon King said discussions with a range of parties, aimed at finalising electricity supply that would see a long-term future for the smelter, were complex and ongoing.
“We are conscious that, as Southland’s largest employer, our future does have a big impact on the region, and we are acutely aware of the need to provide some certainty to the many businesses we work with, as well as our own employees and their wider family and whānau,” King said.
“We work closely with Sheree and her team and will continue to do so as we progress discussions. We will announce an outcome as soon as we can.”
The smelter’s current electricity contract would end at the end of December.
Source: stuff.co.nz – May 20 2024