Rio Tinto’s Tiwai Point Smelter Secures Future with Long-Term Power Deals

Rio Tinto has committed to the long-term future of its Tiwai Point aluminium smelter in Southland, New Zealand, ending years of uncertainty. The company's New Zealand Aluminium Smelters (NZAS) recently signed 20-year power supply agreements with Meridian, Contact, and Mercury, ensuring the plant's operation for decades to come. These agreements include demand response provisions, allowing the smelter to reduce its power usage by up to 25 megawatts (MW) if the grid faces shortages, effectively acting as a de facto battery for the system.

Rio Tinto also acquired the remaining 20% stake in NZAS from Japan's Sumitomo, signaling a firm commitment to the plant. NZAS CEO Chris Blenkiron emphasized that aluminium's role in the energy transition, particularly in electric vehicles and green technologies, makes the Tiwai Point smelter vital. "Aluminium is a core part of the resources needed for the energy transition, and demand will continue to rise," Blenkiron said.

Previously, Rio Tinto considered closing the smelter or selling it as part of its Pacific Aluminium group. However, the recent developments highlight a shift in strategy. The Tiwai Point plant, which draws power from the low-carbon Manapouri Power Station, is among the world's lowest carbon-emitting smelters. At two tonnes of carbon per tonne of aluminium, it far outperforms the global average of 12-13 tonnes.

The secured power deals and the termination of the Lake Onslow pumped hydro project clear significant barriers for New Zealand's power planners. With the expansion of the Kaiwera Downs wind farm by Mercury New Zealand, the region will soon have an additional 155MW of renewable energy.

Rio Tinto is also pursuing carbon-free aluminium production, with plans to install hydrogen-ready anode furnaces and explore ELYSIS technology for carbon-free smelting. This aligns with Rio's broader goal of achieving carbon neutrality by 2050.

The smelter's ability to act as a flexible power consumer enhances the stability of New Zealand's power grid. Blenkiron noted that the smelter's demand response deal is one of the largest globally, allowing up to 4% of the country's electricity demand to be turned off during stress events.

Despite the smelter's age, Blenkiron is optimistic about its future, pointing out continued investments and potential for restarting additional capacity. "Tiwai is in good condition, and we are committed to its future as part of our strategy on energy transition," he said.

Overall, Rio Tinto's recent actions underscore its renewed commitment to Tiwai Point, emphasizing its strategic importance in the global shift towards sustainable energy and low-carbon technologies.