Comalco loss claim ridiculed by P.M.

Press, 4 August 1987, Page 4

Comalco loss claim ridiculed by P.M.

By BRENDON BURNS, political reporter Comalco’s claims that it has lost money from the Bluff smelter were ridiculed by the Prime Minister, Mr Lange, yesterday, during a visit to Invercargill. His rejection of Comalco’s case took place alongside Invercargill’s Labour candidate, Mr Dougal Soper, who was at pains to stay onside with the company. The smelter provides 1300 jobs and much spinoff benefit to the Southland economy. Mr Lange had flown into Southland to start the second week of his election campaign. After a brief press conference, he went to Stewart Island, home to only about 300 voters in the marginal National-held Awarua seat. But the island is clearly a favourite place of Mr and Mrs Lange and merited an overnight stay last night. Mr Lange will begin his forty-fifth birthday there today. At the press conference, Mr Lange had been asked about unemployment in Southland, totalling more than 2000. He, said the region was managing the change in the economy “pretty well.”

Then, he was questioned on Comalco’s claim that it had lost $34 million in the first 15 years since the Tlwai Point smelter

was opened in 1970. The Government is attempting to nearly double the power price. Comalco has hinted that it will close the plant should this be done.

But Mr Lange, ridiculed and dismissed the claim. He said he was "deeply grateful” for the “heroic” way in which Comalco had lost money for so long but had kept going ... “Then decided to absorb a 700 per cent price increase in electricity under the last Government but determined through all that to service New Zealand.”

But Mr Soper, who is a former Southland Trades Council president as well as Labour candidate for Invercargill, said he believed power price increases in the past may have made Tiwai Point lose money. “What the Prime Minister said is quite right. That the accumulated losses that the smelter talk about is a direct result of the power pricing arrangements under the previous Government”

But Mr Lange said it was nonsense to suggest the smelter had lost money since its inception. Mr Soper interrupted the Prime Minister to answer a question about possible total losses. He said he was not an economist and got lost in a multi-national company’s

bookkeeping. The real answer to whether the smelter had lost money probably lay with its ultimate owners in California.

Mr Lange said he had no doubt the company would have lost money in 1977, the year it was forced to accept a 450 per cent Increase in power prices by the Muldoon Government. Another attempt at putting Comalco’s case in its best light was again made by Mr Soper. “They maintain that since the 450 per cent increase that they have steadily accumulated loss.” He said at a recent briefing with the company he had been told instead of expected profits of $2OO million from the smelter, it had sustained a $34 million loss. Mr Lange refused to let Mr Soper have the last word. “That may be the balancing of tos and fros but they undoubtedly were in profit for a number of years.” However, he then seemed to accept there may have been an overall loss on the plant. “I think that would be right.” But Heather Simpson, Labour’s candidate for Awarua, which includes the smelter, said as an economist she did not believe Comalco had made

a loss over any significant number of years. She said she had examined aluminium smelting. “The current price of aluminium makes me quite confident that they are not now making a loss. I think there’s plenty of room for negotiation on the power price,” said Ms Simpson. The Government recently stopped negotiating with Comalco over the power price increase it was seeking. It has handed this over to Electricorp. But a fresh start to negotiations awaits the outcome of asset valuations, still being decided between Electricorp and the Treasury. Mr Lange said an ironical situation could arise if Electricorp wanted to increase Comalco’s power price. The Government might have to provide a subsidy. This was because Comalco had a contract with the Government for electricity supplied to the smelter. He said there was no strategy for the smelter to be forced to close.,'! hope it continues and with some vigour,” said Mr Lange. Today, the Prime Miniter will fly back from Stewart Island, visiting Invercargill and Dunedin en route to an overnight stay in Oamaru. Tomorrow, he will visit Timaru before a lunchtime return to Wellington.