Govt won't buy smelter

Thursday, Oct 20, 2011

The Tiwai Point aluminium smelter is likely to still have a bright future after it is sold, a business commentator says but Finance Minister Bill English has ruled out the Government buying it.

Majority owner Rio Tinto announced on Monday it had transferred New Zealand Aluminium Smelters' Tiwai smelter, near Bluff, and five other Australian-based assets into a company called Pacific Aluminium to be sold soon. A further seven assets worldwide would also be sold.

Finance minister and deputy Prime Minister Bill English was positive about the future of the smelter yesterday but said the Government would not invest into it because it was already "full up with problem investments'', such as South Canterbury Finance and the Christchurch earthquake.

When asked if the Superannuation Fund, which has significant cash reserves, should invest into it, he said it was not up to him to advise the fund what to invest into.

However, Business NZ chief executive Phil O'Reilly yesterday said the smelter's good management history had placed it in the best position for a successful future.

Business leaders in the south were unfazed by the announcement and Mr O'Reilly said while he was not an expert on the Tiwai smelter, from what he had seen over the years it was in good stead to continue running after it was sold.

"What I do know ... about the smelter is it has been run very well and certainly is well connected to the community and a big part of the growth story of the Southland community, and New Zealand community to a certain extent.''

It was impossible to put a value on the smelter, but to a particular company in a particular situation it, combined with the other assets - which include Gladstone Power Station and Tomago smelter - would be very valuable, he said.

It had a history of excellent product and innovation, advanced technology capabilities, a great health and safety record and the use of renewable energy, he said.

"It is all there and that is good  it has got the best possible position ... to have the best possible future,'' he said.

A Superannuation Fund spokesman said it did not speculate on what it may invest in. O'Reilly said it should invest only in assets that would provide the best possible return to its owners, New Zealanders, no matter if they were in New Zealand or not.

Smelter general manager Ryan Cavanagh could not comment about the announcement.

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