Southland industries are warning new jobs for smelter workers affected by their employer closing shop won't be available overnight.
Tiwai Point aluminium smelter will be closed down by August next year, when owner Rio Tinto ends its contract with Meridian Energy. Photo: Getty Images
One of the region's major employers the Tiwai Point aluminium smelter is closing - 1000 people will lose their jobs, and a further 1600 workers in the supply chains will also be hit hard.
Finance Minister Grant Robertson is promising to help the workers find new jobs in agriculture, aquaculture and manufacturing in the region.
The smelter was being subsidised by taxpayers, he told Morning Report.
"In terms of the subsidies we give, the biggest one is around emissions trading scheme credits and that amounts to about $48m for the smelter. In addition, we've just done the transmission pricing review which would have seen another $10m saved off the power bill. It's been a fairly generous provided power source."
There would be no more money going to Rio Tinto, he said.
"We can't force them to stay."
"It's a blow for the people of Southland but we're here to work with those people" - Finance Minister Grant Robertson
Bluff Engineering and Welding director Andrew Watkins said jobs for people leaving the Tiwai Point smelter would be limited in his sector.
"Well, I believe that there will be a percentage [that] will be able to be absorbed into the current engineering industry in our area," he said.
But he hinted at challenges due to the unfolding economic uncertainty.
"Given the current climate due to Covid, I think that we've seen a lot of skilled labour returning to this area. So those people will be taking up some of the jobs, we've been approached by several people recently looking for work who have returned."
The aquaculture sector has also been touted as an option.
Sanford aquaculture manager Ted Culley said there are opportunities on the horizon at the seafood company, particularly around expanding its salmon-processing plant in Bluff.
Bluff, a seaside town in Southland. Photo: RNZ / Ian Telfer
"We're looking to move our operation from 3800 tonnes as it was to 6000 tonnes. So right now, in September this year ... we've got a brand new barge coming in from Hobart in Australia which is a $5.4 million investment," he said.
But Culley said jobs did not come overnight, as the challenge with salmon was that it involved a three-year growth cycle from hatching the eggs to harvesting.
"In around four years' time, we expect that we're going to get some extra 40 jobs in our processing operations and also you know, the indirect jobs if you're looking at the multiplier that most people use around indirect jobs, it's three to one, so it's another 120 jobs," he said.
Bluff community board chairman Raymond Fife said as the economy improves he expected the highly-skilled workers would be in increasing demand.
"No doubt the smelter will be looking at those sorts of options to help the workers and no doubt that other businesses that have probably been struggling to get skilled people may have the opportunity to hire staff as well," he said.
Meanwhile, Southlanders said there was confidence in the local economy and a lot of industries crying out for workers.
Rio Tinto said the Tiwai Point Smelter would be closed down by August next year, when the company ends its contract with Meridian Energy.
Contact Energy chief executive Mike Fuge said his company, Meridian Energy and the government had put a very good offer on the table to help Rio Tinto keep the smelter open.
He told Morning Report decreased demand for power in Southland could mean higher electricity prices elsewhere, because there wasn't the infrastructure to move the electricity north.
Fuge said Rio Tinto should reconsider the move and that transmission pricing issues should have been resolved earlier.
"But there is a resolution on the table now," though it wouldn't come into effect for two or three years, Fuge said.
"The smelter, with the deal on the table is viable, its electricity is 100 percent renewable."
"For Southland New Zealand [Rio Tinto] should be certainly reconsidering" - Contact Energy chief executive Mike Fuge
He said it was viable for the smelter to continue.
"It's a combination of the transmission pricing and the pricing we put on the table and Rio's strategic imperatives and their commitment to sustainability that needs to come together."
This announcement brought instability to the market he said, which could last a number of years.
Diversifying the Southland economy
Southland regional development agency Great South chief executive Graham Budd told Morning Report there were plans for agriculture and hydrogen plants and overall diversification in the region.
"Many of them are in 'the good idea' stage," Budd said.
"We want to fight this" - Great South chief executive Graham Budd
It was investment and promotion of opportunity for investment in Southland, he said.
"The smelter is ... the single largest employer that represents about 6 percent of our GDP. There's plenty of diversity in the rest of the economy across agriculture and tourism. We have other processing - dairy, wood.
"This smelter has been here for nearly 50 years so it has become a significant place not only economy but our community."
He said the government should work to change Rio Tinto's mind.
"We want to fight this till there is a last breath.
"The transmission pricing has been a sticking point of the power price overall the smelter pays."