Pechiney to reconsider Aramoana smelter

Press, 29 June 1982, Page 3

Pechiney to reconsider Aramoana smelter

Parliamentary reporter Pechiney. the French partner in the second aluminium consortium, has agreed to defer a decision on power price until after it has made a feasibility study of the "robustness of the national grid." The move was greeted yesterday by both FletcherChallenge. and the Minister of Energy (Mr Birch) as an expression of confidence in the project.

The executive director of Fletcher-Challenge. Mr Barrie Downey, said from Auckland that it held promise that a power contract would be negotiated sooner or later.

The Prime Minister (Mr Muldoon) called it "good news," and Mr Birch said the feasibility study might give Pechiney the confidence to make an acceptable power price offer to the Government.

Mr Downey said the. study would examine the ability of the national grid to supply power to the project. It was not a new proposal, but simply brought forward the timing of the feasibility study which normally would have followed the settlement of the power price.

The price negotiations were thought to have broken down finally last week, after months of discussions, over ■the Government’s base price per unit. All other items in the five-point package had been settled. Mr Birch made it clear yesterday that if Pechiney came back with an unchanged power price offer, it would be unacceptable to the Government. .

Mr. Downey said that if Pechiney backed out after the feasibility study, the smelter was off as far as the other partners were concerned.

The study is expected to take “several months," and is only the first stage of a wider feasibility study to test design, cost-range, planning and sources of finance. After the first stage, Pechiney will come back to the Government with its power price offer.

Mr Birch said yesterday that Pechiney had not been told the Government’s baseline price for power to the smelter, although it might know the level.

Mr Downey said the cost of the first stage of the study would be “in the hundreds of thousands."

Mr Birch said the consortium was "concerned" about the delay now facing the Clyde- high dam. but that negotiations would continue on the basis of a 1987 completion for the dam — the original target date.

Finally they would become subject to the procedure that would "tidy up the matter of water rights consent."

Mr Birch had intended yesterday to recommend to the Cabinet that the second aluminium smelter not go ahead, but his report to the Cabinet was overtaken bv the new initiative from Pechiney.

In a telephone call in the week-end to Mr Birch. Pechiney said it wanted to do more work, and was “still looking at” the project. Mr Birch said he thought Pechiney was “a bit surprised to learn how firm the Government was on its base price."

He said that there had been no rejection by the caucus of his report last Thursday that the smelter should be dropped. Members were disappointed but understood the reasons behind his advice.

Asked if the Government would go ahead with discussions on further aluminium

development at Tiwai Point with Comalco. Mr Birch said that was Comalco’s’concern.

Talks with Comalco had been arranged for this week and Comalco knew that the Government could not commit power to both projects. However, it was useful to have competing claims for the - power, and a decision would be taken that was in the best interests of the country, he said.

Mr Muldoon said that Pechiney was saying that in spite of the Government’s refusal to budge on the electricity price, it was prepared to go ahead with the feasibility study.

"They know what the Government's price is. and they haven’t walked away from it — they're wanting 'to spend more money. It must be more hopeful."

Asked if the feasibility study might change the base price. Mr Muldoon said this was "impossible to answer" because it depended on possible adjustments of items within the pricing package.

To the same question. Mr Birch replied. "We are very firm that we will get a price which is acceptable in the context of supplying electricity.”