Sharechat Logo

South Port (SPN) Statement on NZAS Tiwai Point Aluminium Smelter Closure

Thursday 9th July 2020

Text too small?

The closure of NZAS Tiwai Smelter in August 2021 will be a major loss to the regional economy. South Port Chairman, Rex Chapman, said that “it was disappointing that the Smelter had not been able to reach agreement with the relevant parties to achieve an acceptable reduction in its energy and transmission costs. The impact of this decision on the Southland economy will be significant. It is to be hoped that the small window between now and next August is used to ensure that the financial impact is mitigated both in the short term and in the longer term. Aquaculture has been identified as Southland’s best near term economic opportunity and now is the time for that opportunity to be realised as soon as possible.”

Shareholders were told at the Annual Meeting in October last year that the Smelter represents 33% of South Port’s cargo volume but the Company receives no wharfage revenue for the raw material delivered to the Smelter on the Tiwai wharf. Instead the Smelter pays the Company a licence fee for the wharf structure which is for a fixed term until 2043. 

The Company estimates that the Smelter’s overall contribution to net profit after tax, excluding the licence fee which is payable until 2043, to be approximately $2M. The Company’s net profit after tax last year (FY2019) was $9.79M. Most recent profit guidance given for the current financial year is for net profit after tax to be in excess of $8.7M.

While the full effect of the closure will not be felt by the Company until FY2022, there is likely to be an as yet unknown financial impact in the current financial year as the Smelter winds down. 

NZAS has been a long-term valued customer of South Port. The businesses have enjoyed a mutually beneficial working relationship and it is sad that this morning’s decision will bring that relationship to an end next year.

South Port New Zealand Ltd  



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Reserve Bank of New Zealand Committed to Action as It Responds to Data Breach
MHM Automation Limited (NZX: MHM) Settlement of New Plymouth Building Sale
Napier Port Holdings Limited (NZX: NPH) First Quarter 2021 Trade Volumes
New Zealand Oil & Gas Limited (NZX: NZO) Mahato PSC Update - Oil Production
Michael Hill International Limited (NZX: MHJ) Update - Dividend/Distribution
Michael Hill International Limited (NZX: MHJ) Trading Update
Tilt Renewables Limited (NZX: TLT) Q3 December 2020 Quarterly Production Results
Mercury NZ Limited (NZX: MCY) Tiwai to continue operations through 2024
NZXO Announcement: Rollover of Fletcher Building Industries Ltd Notes - FBI150
Meridian Energy Limited (NZX: MEL) Rio Tinto confirms Tiwai Exit in December 2024

IRG See IRG research reports