Smelter loss reflects cost-cutting

Press, 13 March 1986, Page 27

Smelter loss reflects cost-cutting

PA Invercargill New Zealand Aluminium Smelters, Ltd, the Tiwai Point smelter operator, has reported a $5.3M loss for the year ended December 31,1985. The smelter returned a $9.9M loss the previous year. The losses are the net difference between a tolling fee and deductible and non-deductible costs incurred, and do not reflect the profitability of the Tiwai smelter. However the reduced loss does indicate the company’s radical costcutting measures introduced last year. NZAS operates on a tolling system through which the smelter provides a service to NZAS shareholders (Comalco, Ltd, and Sumitomo Aluminium) by converting their alumina to saleable aluminium in return for a fee.

That fee is calculated to recover only the tax-de-ductible costs of operating and financing the smelter. The over-all profitability of primary aluminium

is reflected in the results of the participant companies. Comalco, Ltd, which recently lifted its stake in NZAS to almost 80 per cent, has just announced a $69.1M loss for last year. The industry world-wide faces overcapacity and low primary metal prices. The company said yesterday that the increase in the bulk electricity tariff in April last year added about S2OM to the annual power costs. The position was worsened by New Zealand’s relatively high inflation rate and strong dollar. In spite of the result, last year the smelter held its position as the country’s largest export earner for manufactured goods, producing 240,835 tonnes of metal (242,850 tonnes the previous year).