Its hard to see how Rio Tinto’s one month delay in announcing its intentions about the Tiwai Point aluminium smelter is a good sign for (a) the jobs of the workers affected or (b) for the New Zealand taxpayer. Either Rio Tinto is angling for another power price handout from the Key government, or is seeking more time to clinch the sale of the enterprise. Supposedly, the high grade aluminium produced at Tiwai Point makes it less subject to world prices and to competition from China – this making a sale unlikely. But that argument can cut both ways. Since Rio Tinto has been trying to sell some of its other, less attractive smelters as a package, Tiwai Point could still be the sweetener necessary to clinch the wider deal.
While we’re all still in the dark about Rio Tinto’s ultimate intentions, the corporate welfare involved so far has been breath-taking. Rio Tinto is vastly profitable, world wide : yet the Key government handed it $30 million (that’s nearly the cost of a nationwide bowel cancer screening programme that could save about 1,000 lives here each year) to help bridge the gap between the power concessions that Meridian was offering, and what Rio Tinto and its joint venture partner Sumitomo in the New Zealand Aluminium Smaletrs (NZAS) at Tiwai Point were prepared to pay. It was a giveaway. In the year after the Rio Tinto pocketed the $30 million from the New Zealand taxpayer, it recorded an annual profit of $56 million.
There’s no justification for further handouts to this behemoth. This year’s decline in the value of the New Zealand dollar – down by 12.6 % already this year, and still falling – will have already boosted Tiwai Point’s profit position, and these gains will be offsetting some of the recent decline in world aluminium prices. Reportedly, it is now considering its options. It can reduce its uptake. Under the agreement it has with Meridian, New Zealand Aluminium Smelters can reduce the amount of power it consumes from 572MW to 400MW with 12 months notice, prior to December 31.
Currently, the Tiwai Point smelter consumes 13 % of the country’s power. It would be very costly for Rio Tinto to close its Bluff operations, pay redundancies, remediate the site and pull out. There’s absolutely no reason to rejig the basis on which we all pay electricity – as the Electricity Authority has intimated in its paper on transmission pricing – to throw even more of the costs of subsidizing Tiwai Point onto the ordinary taxpayers in some of the poorest regions of the country. From the vantage point of Rio Tinto/Sumitomo, of course, that would be merely business as usual : evidently, they see themselves as having no stake in or responsibility towards the national system from which they benefit. As NZAS CEO Gretta Stephens said recently:
“We welcome the Electricity Authority’s recent paper outlining options for transmission pricing reform which acknowledges that NZAS pays more than $50 million for transmission infrastructure it receives no benefit from,” Stephens said.
For a country that has had its sovereignty violated and austerity measures imposed on it by foreign financiers, the July 5th referendum in Greece should be a giddy exercise in self determination. No such luck. Yet the fact that it is occurring in the midst of a banking meltdown doesn’t diminish the importance of the choice that Greece faces. The options are terrible – between saying “Yes” and embracing the guaranteed pain of more and even greater austerity or saying “No” and risking the leap into the unknown.
Just what result the Greek government is actually promoting could hardly be murkier. For weeks, there have been reports of an internal battle between elements in the government of Alexis Tsipras and the left wing faction of the Syriza party. The clock has had to be allowed to run out on the bailout package before a second phase could be initiated – and a new bailout package could be put on the table. It now has been. Has Tsipras devised that second package so that he can hold out hope to those wishing to vote “Yes” and thereby tip the balance – while he nominally urges a “No” vote to ensure that Syriza stays together onto polling day? No one knows what his real plans are, post July 5th.
Syriza was elected to reject austerity and to champion those who are its innocent victims. It has been demonized in the European media for doing so. On the other side of the fence, German bankers and their pals in the Eurozone want their money, and want to subdue and replace Syriza, and use its fate to deter Spain from voting for another rejectionist party – Podemos – in elections due there later this year. The future of Europe ( and not just Greece) is on the line in this referendum. The aftermath is even more unpredictable than the referendum outcome.