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.
