NZ’s aluminium smelter closure and the Damocletian Sword over Australian industry

In pieces in The Spectator and Quadrant, I address the imp;lications for Ausralia of the closure, as a result of high electricity costs, of New Zealand’s only aluminium smelter.

Australia has loaded over $15 billion a year of costs onto the electricity consumers and taxpayers to subsidise renewables.

This has done nothing to advance renewables to the competitiveness long forecast for them.  Indeed, every new demonstration of the failure of wind and solar brings fresh policy proposals for their further subsidies.  Added to the conversion, at a cost of $10 billion, of Snowy and Tas Hydro, into renewable energy power stabilisers, we now have new “Renewable Energy Zones” with wasteful spending on transmission to permit profitable operations of poor quality, low energy density.   We have already opened another avenue of wasteful spending to eliminate coal by chasing the chimera of hydrogen power.

Ministers have demonstrated an utter inability to understand the effects of such actions on competitive unsubsidised businesses and lack awareness about the effects distortions bring to the economy at large.

Energy Minister Angus Taylor, as a backbencher campaigned against renewable subsidies.  He now wants to keep those on small scale roof-tops – now attracting more subsidies than the large scale facilities – despite even such interventionist agencies like the ACCC beiong unable to see a case for them   As a minister, he has become is more concerned that his department propagates the government’s success in presiding over lower emissions than in cutting subsidies.

Very few politicians understand the issues and those in the Coalition: Craig Kelly and Matt Canavan, are sidelined.

The ALP and Turnbull had no compunction against stacking their advisory agencies with green activists. But even the non-Turnbull Liberals persist in appointing starry-eyed green zealots as advisers to key positions like Treasury, where the top three officials are veteren climate change warriors.  The fact that such trained economists are available is a lamentable commentary on the shift of economics profession. Once a discipline that focussed on the need ot minimise the role of political interference, it has been one that trains people to use the levers through which such interference can  be exercised.

Staggering on with present policies, aggravated by the COVID political measures, means the slow-motion economic train wreck caused by energy policies will, at best, continue.  More likely we will see our economic fortunes rapidly deteriorate with announcements of closures of energy intensive businesses, which are among our most productive.

It is very difficult for a nation to devise policies that destroy its economy but Australia is succeeding.

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30 Responses to NZ’s aluminium smelter closure and the Damocletian Sword over Australian industry

  1. Bruce of Newcastle

    Tiwai Aluminium Smelter is located in South Island.

    This:

    The South Island is heavily reliant on hydroelectricity, with 98% of its electricity generated by hydroelectricity in 2013.

    And that’s all you need to know about renewable energy.

  2. Zyconoclast

    …Ministers have demonstrated an utter inability to understand the effects of such actions…
    … Very few politicians understand the issues …
    … The ALP and Turnbull had no compunction against stacking their advisory agencies with green activists. But even the non-Turnbull Liberals persist in appointing starry-eyed green zealots as advisers to key positions …

    You are far too kind.
    They may feign ignorance but! it was just being clueless, they would occasionally make a mistake in our favour. This never happens.

    Treasonous kleptocrats is closer to the mark.

  3. RobertS

    “Treasonous kleptocrats” is an appropriate term. Treason describes the act of impairing the well-being of a state to which one owes allegiance. I do not believe that “Very few politicians understand the issues..”
    I believe that most of them are cowards.

  4. NoFixedAddress

    Energy Minister Angus Taylor, as a backbencher campaigned against renewable subsidies.

    a proven liar

  5. The energy future will make the coronavirus days look like a picnic in the park.

  6. NoFixedAddress

    bemused
    #3510857, posted on July 12, 2020 at 2:39 pm

    The energy future will make the coronavirus days look like a picnic in the park.

    Just another day in the destruction of The West.

  7. Ed Case

    Aluminium refineries and smelters in Australia have been subsidised from the get go.
    Now that it’s coming to an end, what is the CBA for Australia?
    On the cost side we’ve paid their power bills for 60 years, Abos were forced off their own land at Weipa and Gove, massive air and water pollution from the CFPSs and the Smelters followed by human health impacts
    in surrounding areas, opportunity costs.
    On the plus side there’s been skills acquisition and development of associated industries in a few local areas.
    All up, i’d say it’s been a long running human and environmental disaster.

  8. Faye

    Read Alan’s article above – and weep.
    There must be more to the Liberal Party’s obsession with renewables.

    Even blind Freddy can see renewables DEPEND on TWO INTERMITTENT SOURCES of POWER?!!!! And blow the batteries, they have to be bigger than Uluru EACH, for them to be of any use.
    Well again why is the Liberal Party choosing to GO WOKE instead of following empirical evidence and COMMONSENSE! How dare the government put the country into this situation.

    Yes, I am SHOUTING because the government knows exactly what is happening. They don’t have to take the advice of the Green carpetbaggers but the government chooses to. Any way we can find out who, on the government payroll, invests in renewables? If the Liberal Party had any guts at all they would cancel the subsidies and tell the industry it has passed the subsidies used-by-date and they are now to invest 100% of their own money. That should take care of it.

  9. Bones

    A comment made some time ago by an UK politician: “Anybody is capable of stuffing up the UK economy, however it will take a real expert to stuff Australia’s”.

  10. Lee

    Well again why is the Liberal Party choosing to GO WOKE instead of following empirical evidence and COMMONSENSE!

    Because, like the institutions, even the LNP has been infiltrated by the Left.

  11. Charles

    In NSW Michael Photios (Liberal Party officeholder and Renewable Energy lobbyist) has control over who gets to sit on seats in parliament for the Liberal party, he even ensured Scott Morrison succeeded his favoured pick Malcolm Turnbull to the highest job in the land.

    That is why the Liberal party is obsessed with RE, because if they don’t toe the line they don’t get to be in parliament (state or federal).

  12. Fat Tony

    It is very difficult for a nation to devise policies that destroy its economy but Australia is succeeding.

    I thought Australia had been chosen for “re-wilding” and to then be settled by our blackfellas and Africans (& no whites).

  13. Oh come on

    I’m kind of surprised there was an aluminium smelter in NZ. Wouldn’t it only make sense if it ran off a geothermal energy supply, like they do in Iceland?

  14. Faye

    Photios is part of why I left the Liberal Party, the other part was Turnbull.

    We have to rid the party of the so-called moderates, progressives, centrists, etc (executive and politicians) who follow the communist line. It’s not socialism any more it is communism. For instance, world wise how do you think China became a world power? The globalists “transferred” America’s ability to create wealth for itself across to China.

    They lie about everything, even what they call themselves. Enough has happened of late for the ordinary person to realize it’s not the old Liberal/Labor system. The commos have chipped away at our democracy for years and we can see how they would run the joint – them in their ivory towers and the dregs (us) in the Chop Sewers.

  15. Bruce of Newcastle

    OCO – Kiwiland has oodles of hydroelectricity for the obvious reasons. It should be economic but hydro sells into the renewbulls market as a baseload leveller so it is increasingly valuable. Tiwai Point was built to use hydro, just like the Canadian aluminium and zinc smelters were. Likewise the Tassie aluminium and zinc smelters.

  16. NoFixedAddress

    Fat Tony
    #3510909, posted on July 12, 2020 at 3:58 pm

    It is very difficult for a nation to devise policies that destroy its economy but Australia is succeeding.

    I thought Australia had been chosen for “re-wilding” and to then be settled by our blackfellas and Africans (& no whites).

    I haven’t seen anything that would change that Fat Tony.

    Possibly the export industries, Australian Public Service Governments ™ and of course refugees may get an exception.

  17. NoFixedAddress

    BoN

    In Victoria, the Portland aluminium smelter was setup in conjunction with Loy Yang Power Station.

    Loy Yang provided the then cheapest electricity in Australia.

  18. Neil

    If high electricity costs is the reason for the closure of the smelter what has changed? AFAIK the South Island has always used hydro electricity. Furthermore hydro is one of the few forms of renewable energy that actually works.

  19. John snowy Bowyer

    No Fixed Address, I drove by Loy Yang this morning and it is going flat knack! Steam column huge! It is probably still the cheapest power available which is why it is so important to crash it or shut it down. If it was stopped the renewables debate would also crash with Victoria and SA suffering brown outs!

  20. Squirrel

    The basket weavers have surely taken great heart from the closure of the NZ smelter and will be eagerly looking forward to the same outcome here – after all, it will help us meet our Paris targets and we can always import what we don’t produce here……..

  21. mark jones

    Dimwits! Aluminium smelters ensure base load power. Power generates against a load. This is the reason ruinables fail. Mr and Mrs Kerrfups like their kettle boiled in the morning and in the evening. They enjoy having their house lit in the evening…what Mr and Mrs Kerrfups do not understand, their power needs cannot ensure the operation of a base load power station. Mr and Mrs Kerrfups are peak load parasites. Industry always ensures our way of life. Without Portland, Loy Yang could not be built without a guaranteed load…Portland…the benefit to Mr and Mrs Kerrfups? Cheap power..the benefit to our way of life..cheap power. Our street lights are a small function of providing a load, our offices lit at night, a small function of providing a load. Portland? THE load! Dispatchable means Portland knows at any time 24hrs a day, they will get megawatts of power at a set price. This dispatchable power? Not only, Loy Yang, but Hazelwood, Yallorn, Snowy…as required..in advance for 24hrs a day, 7 days a week, 52 weeks a year. No solar panel or windmill can ever think to supply without human stupidity.

  22. Neil

    This is the reason ruinables fail.

    Yes but I thought hydro works and the NZ South Island gets its power from hydro. I don’t think high electricity costs could be the reason the smelter is leaving NZ because AFAIK NZ has always got the majority of its power from hydro

  23. mark jones

    Cascade failure? Ruinables, with stupid human intervention MUST be used when the wind blows and the sun shines. As more and more ruinable power comes on line, baseload must be wound back to balance the generated need against the load. A cloud? a lull in wind strength? The power comes off instantly, the load draws continuously, pulling down what little is being supplied, the voltage drops, the frequency starts to slow, the baseload power that is online cannot maintain frequency fast enough to take up the load, drops out. In turn, other stations further afield, drop out…a black out. Resulting in a black start against NO LOAD. The system is protected from allowing such a thing to happen. Entire networks will trip out rather than allow a network failure…where does this leave industry? Unreliable EXPENSIVE non dispatchable power cannot be a good business decision , the contract comes up for renewal, the smelter closes..as does the base load power station that supplies it…no more cheap power for Mr and Mrs Kerrfups.

  24. Neil

    Cascade failure? Ruinables, with stupid human intervention MUST be used when the wind blows and the sun shines. As more and more ruinable power comes on line, baseload must be wound back to balance the generated need against the load.

    The topic is the smelter in the South Island of NZ. They get 98% of its electricity from hydro. AFAIK they do not used wind or solar.

    Please stay on topic. My understanding is that hydro works

  25. mark jones

    Neil..stupid human intervention closes smelters. Human intervention causes power costs to be in flux continuously. Stupid human governments virtue signal at their peril!

  26. Neil

    Neil..stupid human intervention closes smelters. Human intervention causes power costs to be in flux continuously. Stupid human governments virtue signal at their peril!

    AFAIK the South Island of NZ has always had hydro. There has been no human intervention to change that.

    So if electricity costs have increased in NZ I would like to know why.

  27. Herodotus

    Head Case wants it all to stop. The way things are going, it will all stop.
    Then Head Case will complain about something else until the power goes dark.

  28. mundi

    I think everyone has this backwards… this is the greens shooting themselves in the feet.

    The whole reason to put a Aluminum smelter in South NZ was because it was greenest place on earth for one.

    They had excess hydro power – literally have to empty water from the dams. Better to use that to smelt something – which they did.

    Then they stopped building dams/hydro. So as demand grew, the price went up. Without cheap/free power there is no point importing buxite to smelter it and then export it again.

    It will now be smeltered some place else, almost certainly by coal power, probably China or Australia.

  29. Siltstone

    The NZ smelter is charged very high transmission fees.

  30. Catcalling Inebriate

    It has somehow escaped the public gaze, but aluminium smelters are an endangered species globally for one plain reason: Russia is flooding the market with cheap metal. Why? Because they don’t have to worry about power costs in a totally corrupt system. Even the Chinese have shut about half their plant (and it’s not as though they are exactly market-based).
    Australian (and NZ) smelters were established with subsidised power deals back in the 1980s. This much is on the record (Kennett published an audit on the Victorian case, while the NSW deal was a Wran special and Joh did his thing in Qld for a company he and others somehow became shareholders in).
    There is no justification at all for maintaining smelters on subsidies on the huge scale they’ve had for decades.
    BTW: the cheapest power for smelters in market economies is hydro, notably in Canada.

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