Aluminium Smelter

The aluminium smelter at Tiwai Point near Invercargill opened in 1971. It had a contract to buy cheap electricity, generated by hydro-electricity from Lake Manapouri which is not far away. Now in 2013, 13% of all electricity generated in New Zealand, goes to the Tiwai Point smelter. However, Rio Tinto, which is the majority owner of Tiwai Point, says that this price is still too expensive. The company wants a cheaper price for its electricity because of the high kiwi dollar and the drop in world prices for aluminium. If they don’t get a cheaper price, they might have to close. This company employs 700 staff and more than 2000 other people do contract work for the company or benefit from the company in some way. If the smelter closes, many people will be unemployed because there are not many other jobs in Invercargill. The company also puts about $3.65bn into the New Zealand economy. However, other countries now produce cheaper aluminium than New Zealand.

The Prime Minister, John Key, offered a short-term subsidy but Rio Tinto did not accept it. Maybe the reason for his offer was to keep jobs. Maybe it was because he was worried there would be too much electricity generation and the price of electricity to New Zealanders would drop. Shares in three electricity companies will go on sale very soon.

Listen to March 6th 2013 to hear more about selling electricity companies.


• smelter – produce aluminium metal from bauxite by melting
• contract – an agreement to pay $X for Y
• generated – made
• majority – main. Rio Tinto owns more than 50% of the company.
• benefit – something good
• subsidy – financial help

Note: aluminium – British Eng (stress on 3rd syllable). Aluminum – Am English (stress on 2nd syllable)

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