Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

The Tiwai Point smelter in New Zealand reported a $46mn ($29mn) net loss in 2019—a $68mn earnings decrease from the prior year—because of lower, volatile aluminum prices and high energy costs.


The smelter is owned by New Zealand’s Aluminum Smelter (NZAS), itself owned by Pacific Aluminum, which in turn is a wholly-owned Rio Tinto subsidiary. 


Aluminum prices decreased by 15pc in 2019 from the previous year, averaging US$1,791mt, which decreased the company’s competitiveness due to New Zealand’s lower dollar value. As a result, Rio Tinto, which wholly-owns Pacific Aluminum, is reviewing the smelter’s viability. 


Stew Hamilton, NZAS’s chief executive officer and general manager, said that irrespective of how efficiently his team works, exorbitant power and transmissions costs are too much to offset. Consequently, the Tiwai smelter vacillates between small profits and losses.


There remains room for optimism, though. NZAS is powered by renewable hydro-electricity, which means it’s well positioned to produce low-carbon alumninum to meet the fledging demand from various industries, including automotive. If the smelter can secure energy rates commensurate with the level of service it receives, NZAS can maintain its Tiwai operation provide primary metal both domestically and as exports to Japan, Hamilton said, adding Tiwai’s energy costs are among the highest in the world.


The smelter recorded a $313mn statutory after-tax loss in 2019 after turning a $207mn profit the year prior. However, it lost $18mn in 2017.

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