What if? The smelter, power politics and George Serrallach's vision for New Zealand's energy future.
A letter from 1977 offers a glimpse into an alternate energy future for New Zealand, challenging the status quo and raising questions about missed opportunities in our infrastructure development.
Sifting through the files at Archives New Zealand I found a rather interesting letter. It was sent to Prime Minister Robert Muldoon in late 1977, as the Government and Rio Tinto/Comalco locked horns over the price the Tiwai Point smelter in Bluff paid for power.
Such spats have been a recurring theme over the life of the smelter, as have threats from Rio Tinto to close the operation. The last threat to close was only in 2020, only for the company to change their minds following the negotiation of a new 20-year electricity contract that will supposedly allow the smelter to operate until 2044. I wouldn’t bet on that agreement lasting that long - given their history Rio Tinto will make a another threat to close the smelter well before 2044. Once again, the possibility of job losses in Southland will be used to line the profits of Rio Tinto.
Rio Tinto’s New Zealand smelter subsidiary, widely known by its former name of Comalco Ltd, now calls itself New Zealand Aluminium Smelters Ltd. For the purposes of this article, I will continue to use the Comalco name as it makes the most sense in a historical context.
The smelter uses 13 per cent of New Zealand’s electricity. George Serrallach’s letter helps us imagine an alternative future where the government called Comalco’s bluff, pun intended, closed the smelter, and utilised Manapouri power as part of a pumped hydro scheme.
Rio Tinto is not the first multinational corporation that has attempted to bully a government, perhaps what is surprising in Comalco’s case is how often they have gotten away with it.
Background
The smelter project dates back to January 1960 when the New Zealand Government reached an agreement with Australian mining company Consolidated Zinc (later part of Rio Tinto) to investigate the potential of building a hydro power station and an aluminium smelter to utilise the power generated. The government also agreed to a request from the company for the natural level of Lake Manapouri to be raised 2.1 metres. This later proposal ended up being highly contentious, sparking the birth of the Save Manapouri Campaign (SMC). In March 1970 the New Zealand Parliament received a petition signed by 265,906 New Zealanders - approximately 10% of the population - opposing the raising of the lakes on environmental and scenic grounds.
The secrecy around the price the smelter paid for its power also promoted scepticism of Comalco among the general public - the original Comalco rate was later revealed to be 13 times lower than the rate paid by New Zealand householders and one twentieth the rate charged to other industries and farmers (Horton, 1992).
During the 1975 election campaign, both major political parties promised to review the Comalco agreement. Formal negotiations began in October 1976 and reached a stalemate in June 1977. In an audacious move, not repeated before or since, Prime Minister Robert Muldoon threatened to settle the dispute with Government legislation in October 1977.
The Letter
George F. Serrallach of Palmerston North sent Muldoon a letter congratulating him on his stance:
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