Power squeeze costs aluminium smelter millions

The Bluff aluminium smelter has lost more than $12 million in production as a result of the power squeeze, The New Zealand Herald reported today. The Rio Tinto Alcan smelter cut production by nearly 3000 tonnes a month in early May to avoid buying power on the spot market in addition to its long-term contract supply from Meridian Energy. New Zealand Aluminium Smelters general manager Paul Hemburrow said the smelter was designed to run constantly and reducing production was costly and disruptive. "This is the fourth time in seven years that we've gone through reductions of this nature and I guess we've got to manage our process best as we manage this. Our process works best when we've got consistent raw materials and energy." The smelter has a deal for the bulk of its power until 2030 but quit buying on the spot market when the price was a little over 20c/kWh. With spot prices still above 30c/kWh the smelter would not be buying anytime soon. "It's miles off the mark now -- we can't afford to operate at the levels it's currently running." Another of the country's big spot power buyers, Pan Pac pulp and paper mill near Napier, has shut down three of five of its pulping machines. Mill general manager Fred Staples said the company had given up developing some business in China and India because it could not match the marketing effort with production. "We're pretty concerned. We think the whole market is pretty dysfunctional." Yesterday Environmental Defence Society executive director Gary Taylor said the "answer to the dilemma" was to negotiate with the smelter for a potline to be taken offline. But Mr Hemburrow said the suggestion was "very simplistic". Savings of more than 10 percent had already been made by cutting an "enormous" 66mW of power use -- the equivalent of 600,000 homes reducing power by 10 percent. The smelter, in conjunction with power supplier Meridian, had also offered "instantaneous load reserves" back into the market, which Mr Hemburrow said had "the direct impact of reducing consumption of water in the hydro lakes". Source: NZPA