Rio Tinto to buy out New Zealand Aluminium Smelters

Spanish Market: Electricity, Metals
31/05/24

UK-Australian mining firm Rio Tinto has signed an agreement to acquire Japanese firm Sumitomo Chemical's stake in New Zealand Aluminium Smelters (NZAS) to own 100pc of NZAS.

Rio Tinto will buy Sumitomo Chemical's 20.64pc stake in NZAS for an undisclosed price which will give it full control of the joint venture if all approvals — including from New Zealand's Overseas Investment Office, are secured — Rio Tinto said today.

NZAS operates the Tiwai Point smelter at Southland on New Zealand's South Island, which was expected to close in December, but will now operate for at least two more decades as Rio Tinto signed 20-year supply deals with local utilities Meridian Energy, Contact Energy and Mercury NZ for a combined base-load volume of 572MW. The smelter is the largest single user of electricity in the country, and produced between 333,000-336,000 t/yr over 2021-23.

The power supply agreements are expected to begin in July and run until at least 2044, with the biggest coming from Meridian Energy at 377MW, followed by 100-120MW from Contact Energy and 50-75MW from Mercury NZ. The supply deals — which are subject to regulatory approvals and other conditions — include 20-year demand response agreements with Meridian Energy and Contact Energy, under which NZAS may be requested to reduce electricity consumption by up to a total of 185MW.

"The NZAS decision to extend the smelter life removes significant uncertainty for the electricity sector, which also helps pave the way for new renewable energy to be built," Meridian Energy chief executive Neal Barclay said on 31 May.

Rio Tinto has also signed an agreement to buy Sumitomo Chemical's 2.46pc stake in Boyne Smelters Ltd (BSL), which owns and operates the Boyne Island aluminium smelter in Gladstone, Australia. Rio Tinto's interest in BSL will increase to 61.85pc upon completion of the deal.

Sumitomo Chemical said it held shares in the Australian and New Zealand business for the purpose of importing primary aluminium for resale, but decided to sell its interests as changes in global market conditions led to "high" volatility in profitability and as it looks to strengthen its financial position.

Rio Tinto originally planned to shut down NZAS in August 2021 because of high energy costs and a tough outlook for the sector, but pushed back its decision a few times.

By Juan Weik

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

05/11/24

Boeing workers approve contract, end strike: Update

Includes additional contract details in 3rd and 4th grafs, and background on Boeing. Houston, 5 November (Argus) — Union-backed machinists approved a new labor contract with aircraft manufacturer Boeing, ending a seven-week work stoppage that halted production of major jet programs and disrupted aerospace supply chains. More than 32,000 factory workers represented by the International Association of Machinists and Aerospace Workers (IAMAW) voted by 59pc to ratify the deal, the local union said late Monday. Employees secured a general wage increase (GWI) of 38pc spread out over the contract's four-year life, a one-time $12,000 ratification bonus and greater 401(k) contributions, among other retirement and health care benefits. The pay raise — a sticking point in prior rounds of negotiations — improved upon Boeing's first two offers of 25pc and 35pc but fell short of the 40pc sought by workers. Still, the union touted that the GWI in the new contract amounts to 43.65pc when compounded. Boeing chief executive Kelly Ortberg acknowledged the past few months "have been difficult" in expressing his appreciation that both sides were able to come to terms. Workers began their strike on 13 September, effectively shutting down Boeing's final assembly lines in Renton and Everett, Washington, where the company produces its flagship 737 MAX aircraft, along with its 767 and 777 programs. That stoppage further exacerbated issues within Boeing's operations that have been under heightened scrutiny since January, when a midair panel blowout led to a mandated production cap on the 737 MAX. Additionally, parts shortages and other supply chain challenges have constrained output of the company's main widebody program, the 787 Dreamliner, this year. The strike itself compelled Boeing to initiate cost-cutting measures with the production halt weighing on its finances . The company on 11 October announced it would lay off 10pc of its total workforce, while confirming on 23 October that it had stopped shipments from certain suppliers to conserve cash. The latest estimate from Anderson Economic Group, which does not account for last week, puts Boeing's losses at $5.5bn and its suppliers' losses at $2.3bn because of the work stoppage. All workers must return to their positions by 12 November but can return as early as Wednesday, the union said. Still, Boeing cautioned that it would take time for operations to stabilize, saying it would have to retrain and recertify employees who did not "get enough time on an airplane" before they went on strike. The company also will have to contend with a supply chain that it "turned off in many cases" because of the work stoppage. By Alex Nicoll Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Boeing workers approve contract, end strike

05/11/24

Boeing workers approve contract, end strike

Houston, 5 November (Argus) — Union-backed machinists approved a new labor contract with aircraft manufacturer Boeing, ending a seven-week strike that halted production of major jet programs and disrupted aerospace supply chains. More than 32,000 factory workers represented by the International Association of Machinists and Aerospace Workers voted by 59pc to ratify the deal, the local union said late Monday. Employees secured a general wage increase of 38pc spread out over four years and a $12,000 ratification bonus, along with other retirement and health care benefits. All workers must return to their positions by 12 November but can return as early as Wednesday, the union said. By Alex Nicoll Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Latin America mulls nuclear power revival

05/11/24

Latin America mulls nuclear power revival

New York, 5 November (Argus) — Nuclear power is gaining traction in Latin America as countries see small modular reactors (SMRs) as options for remote regions that are not connected to power grids. "The advent of SMRs are behind Latin America's new interest in nuclear energy, because they do not need to be large and do not require large investments," said Modesto Montoya, a nuclear physicist and former president of the Peruvian Institute for Nuclear Energy. Nuclear power is not a prevalent source of electricity in Latin America, producing around 2pc of the region's power consumption. There are seven nuclear power plants with a total capacity of 5.07GW in operation in the region, located in Argentina, Mexico and Brazil. Argentina has a 32MW SMR plant under construction. But the role of nuclear could increase in the region. Argentina, Brazil and Mexico are providing technical advice to countries that are considering including the technology in their power systems. Earlier this month, El Salvador approved a nuclear energy law and signed a memorandum with the Argentinian government for scientific and technology cooperation for nuclear power. Daniel Alvarez, director of the Agency for Implementation of the Nuclear Energy Program in El Salvador, told Argus that the country was "following the book to develop nuclear power. We want to convert El Salvador into a nuclear country." The country needs to replace fossil fuels as half of the country's power capacity is fueled by bunker fuel. It has 204MW of geothermal capacity installed and, while solar energy is possible, the country's size limits the amount of physical space to add large solar plants. The government's plan is to have a research reactor and 400 people trained to manage a nuclear plant within seven years. The next step would be the construction of SMR. "We have to include alternatives for power generation and SMRs are a very good option. We want to include them in our transition to 2050,"Alvarez said. SMRs are also seen as a solution to the energy problem in the northern jungle city of Iquitos, in Peru, energy and mines minister Romulo Mucho said. It is one of the world's largest cities that is not accessible by road and not connected to the national grid, relying primarily on fuel oil for power generation. Peru has had experience with nuclear technology since 1988, when it opened the nuclear research facility, RASCO. Neighboring Bolivia has been working on a small nuclear program since the previous decade with Russia's Rosatom. It has a center for nuclear medicine and is finishing a small research reactor. Ronald Veizaga, deputy minister of electricity and renewable energies, said Bolivia began the program to improve medical treatment for cancer, but has changed gears. "Critics claim SMRs are expensive, but it is more expensive to have blackouts affecting your population and industry," he said. Traditional nuclear Paraguay is considering a more ambitious path, looking at a traditional nuclear plant. "We need to make political decisions if we want to explore a SMR or a large-scale plant to generate 1GW or more," said Jorge Molina, executive secretary of Paraguay's Radiology and Nuclear Authority. Paraguay could work with Argentina and Brazil to create a regional platform. "Our idea is part of regional integration. Our neighbors are already helping us develop our regulations," he said. But the construction of nuclear plants comes with challenges including high costs, time, labor and materials. Brazil began work on the 1.4GW Angra 3 nuclear plant in 1984 but works have been halted and resumed several times since then. The plant is roughly 67pc complete and has been in limbo since 2015. The country's Bndes development bank recently concluded that abandoning the construction of the project would be less costly than completing it. By Lucien Chauvin Countries with installed nuclear capacity in Latin America GW Country Capacity Argentina 1.64 Brazil 1.88 Mexico 1.55 — Ons, Cammesa, Cenace Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Japan’s 53MW Chokai Minami biomass plant comes on line

05/11/24

Japan’s 53MW Chokai Minami biomass plant comes on line

Tokyo, 5 November (Argus) — A joint venture led by Japanese utility Tohoku Electric Power has started commercial operations at the 53MW Chokai Minami biomass-fired power plant in Japan's Yamagata prefecture. Operations started on 2 November. The plant burns a combined 200,000 t/yr of imported wood pellets and palm kernel shells (PKS) to generate around 330 GWh/yr of electricity, which will be sold under the country's feed in tariff (FiT) scheme, the joint-venture company announced on 5 November. The plant is operated by Chokai Minami Biomass Power, which is 75pc owned by Tohoku Electric Power, 15pc by renewable energy developer Olympia and 10pc by a subsidiary of Japanese gas supplier Shizuoka Gas. Chokai Minami is Tohoku's first biomass-only combustion project. The company has also invested in the 50MW Niigata Higashikou biomass plant, which is planning to start operations in mid-November, later than October as initially scheduled. Tohoku has two other planned biomass projects, the 2MW Yokote and the 2MW Yuzawa plants. These facilities are scheduled to come on line in June 2026 and October 2026 respectively. By Takeshi Maeda Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US railroad-labor contract talks heat up

04/11/24

US railroad-labor contract talks heat up

Washington, 4 November (Argus) — Negotiations to amend US rail labor contracts are becoming increasingly complicated as railroads split on negotiating tactics, potentially stalling operations at some carriers. The multiple negotiating pathways are reigniting fears of 2022, when some unions agreed to new contracts and others were on the verge of striking before President Joe Biden ordered them back to work . Shippers feared freight delays if strikes occurred. This round, two railroads are independently negotiating with unions. Most of the Class I railroads have traditionally used the National Carriers' Conference Committee to jointly negotiate contracts with the nation's largest labor unions. Eastern railroad CSX has already reached agreements with labor unions representing 17 job categories, which combined represent nearly 60pc of its unionized workforce. "This is the right approach for CSX," chief executive Joe Hinrichs said last month. Getting the national agreements on wages and benefits done will then let CSX work with employees on efficiency, safety and other issues, he said. Western carrier Union Pacific is taking a similar path. "We look forward to negotiating a deal that improves operating efficiency, helps provide the service we sold to our customers" and enables the railroad to thrive, it said. Some talks may be tough. The Brotherhood of Locomotive Engineers and Trainmen (BLET) and Union Pacific are in court over their most recent agreement. But BLET is meeting with Union Pacific chief executive Jim Vena next week, and with CSX officials the following week. Traditional group negotiation is also proceeding. BNSF, Norfolk Southern and the US arm of Canadian National last week initiated talks under the National Carriers' Conference Committee to amend existing contracts with 12 unions. Under the Railway Labor Act, rail labor contracts do not expire, a regulation designed to keep freight moving. But if railroads and unions again go months without reaching agreements, freight movements will again be at risk. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more