Since being commissioned in 1971 the Tiwai Smelter has been expanded three times and currently produces 334,000 tonnes per annum of the highest purity, high value aluminium (99.98% pure) produced anywhere in the world. 2,600 full time positions are dedicated to servicing the Tiwai operation.

NZAS is Southland’s second largest single employer and also generates a significant volume of activity for a wide range of Southland companies.

NZAS maintains a competitive advantage from a global smelting perspective by consistently producing high quality aluminium, which demands a premium in the market place. The smelter is regarded as one of the most efficient operations in the world and actively promotes skills development and is an Asian Pacific leader in workplace safety.

Future Direction
New Zealand Aluminium Smelters projects strong future growth. However, NZAS needs to secure a robust and reliable power supply at a globally competitive price to continue its New Zealand operation. These power negotiations commence in 2006 and the current Meridian power supply contract ceases in 2012.

The uncertainties associated with the continued operation of the Tiwai Smelter are further exacerbated by calls from people associated with the energy sector to have Tiwai disconnected from the grid to provide for domestic energy growth.

Report Findings
In order to understand the impacts of NZAS on the Southland economy, Venture Southland has commissioned an assessment from one of New Zealand’s leading economist consultancy – Infometrics Limited – supported by Southern Institute of Technology.

The key findings are as follows:
NZAS Contribution to Southland Economy:
• $1,600m in gross sales and purchases
• $500m or 18% of the Region GDP (this is defined as gross sales less expenditure inputs on materials, labour, return on capital, and indirect taxation) Southland’s GDP is $2,800m
• 2,600 full-time equivalent jobs

In addition to the key findings the report also indicates that NZAS stimulates central government expenditure on health and education in the Southland economy. The additional expenditure and associated employment are as follows:
• $40m government-related expenditure
• 700 additional full-time equivalent jobs

The effects of NZAS Closure
The short term and medium term economic impacts of Tiwai closure is difficult to assess because of the uncertainties associated with possible existing industry expansion or new industry establishment in the region.

Infometrics Limited estimates that closure of NZAS would lead to:
• Up to 5% of Southland’s population moving out of the region
• $195m permanent loss in Southland GDP (possibly under estimated and assumes some degree of industry substitution and does not account for the higher per capita spend by NZAS employees)
• $250m decrease in property values
• $8m loss in Government funding
• Significant loss in Trades opportunities and skill development

Port Facilities
The possible closure of NZAS would lead to a 55% reduction of the cargo by volume through Southport and significantly undermine the viability of the Regional Port, the major shipping lines that also service Tiwai would cease to call at Bluff and inability to back load significant volumes of freight would also impact on the competiveness of the high performing Southland Export Sector.

Social Effects of NZAS Closure
Loss of up to 2,500 children from the region, resulting in the closure of:
• One large primary school
• One large secondary school
• Reduced rolls in other schools
• Significant reduction in health related services and up to $14.1m reduction in health spending.
• Loss of skills
• Loss of volunteer capability and NZAS volunteer programmes
• Loss of $100,000 NZAS related grants and donations
• Loss to Southland’s environmental projects

The information obtained in carrying out this Assessment will be utilised to demonstrate the importance and impact NZAS has on the Southland economy. The information will be a valuable tool when Central Government is making energy decisions that will influence the development and the future of large industry in Southland and New Zealand.