The End-of-Week Essay: Calling Rio Tinto's New Zealand Bluff

RIO TINTO: CLEAN UP YOUR OWN BLUFF SMELTER MESS

And Bugger Off

Murray Horton

CAFCA

13 Febrary 2020

For as long as the Campaign Against Foreign Control of Aotearoa (CAFCA)
has existed – more than 45 years now – we have called for the closure of
the Bluff aluminium smelter, owned by giant transnational corporation,
Rio Tinto. There are numerous grounds for doing so, all of which amount
to the smelter not being in New Zealand’s national interest. The
corporate welfare power price deal (the price is still secret) by itself
qualifies the smelter as the country’s biggest bludger. Once again Rio
Tinto is pulling the same old party trick of threatening to close down
and leave the country unless it gets an even better deal than what it
currently enjoys.

The conventional analysis used to be that the smelter is bad for the
country but good for Southland. Not so more, in light of very recent
events. Last week’s huge floods throughout Southland ran the very real
risk of setting an environmental catastrophe (not to mention a major
threat to life) if the water had got into huge quantities of toxic waste
stored in Mataura, which would have released ammonia gas. Fortunately,
that did not happen. But neither the toxic waste nor the threat have
gone away.

What is this toxic waste? Some (but by no means all) media reports
correctly identified it as the poetically named dross, the toxic waste
product of the smelter. And why is it being stored in a closed down
former papermill building right next to a river in Mataura (along with
other places dotted across Southland)? Because Rio Tinto got sick of
storing it onsite at Bluff and decided to outsource its disposal to a
third-party company, which took it off Rio Tinto’s hands in 2014 and
then promptly went bust in 2016. Leaving the people of Mataura, and
elsewhere in Southland, stuck with the problem.

Following last week’s flood, the Gore District Council made a verbal
deal with the smelter management to have the dross removed. That deal
was overruled by Rio Tinto’s Board. As Gore’s CEO said: “We had a deal
sealed with a good old-fashioned Southland handshake, but Rio Tinto’s
bosses have reneged”. At which point the “transformative” Government
started to wake from its stupor. Environment Minister David Parker said
it was “disgraceful” and “I’ve had enough” and threatened to look at
suing Rio Tinto.

Good luck with that one, Minister. That would involve Labour facing up
to the 2003 and 04 indemnities signed by Michael Cullen, Labour's
Minister of Finance at the time, accepting that the taxpayer, and not
the smelter owners, would be liable for the cost of cleaning up toxic
waste produced by the smelting process. That liability was renewed as
recently as 2016, by the Key government.

Yes, that’s right. Rio Tinto has outsourced the liability for cleaning
up its mess onto the New Zealand taxpayer. And supine governments, both
Labour and National, have gone along with that. It’s a textbook example
of a transnational corporation privatising the profits and socialising
the costs.

CAFCA suggests that the Government makes Rio Tinto clean up its own
mess, at its own expense. And that the Government cuts short Rio
Tinto’s decades-long tiresome threatening to close down and assist them
to do so. With a “good old-fashioned” boot up the arse.

Additional historic data:

The best explanation of the whole question of the smelter’s toxic waste
and who is responsible for cleaning it up is in the below extract from
the Judges’ Report for the 2013 Roger Award for the Worst Transnational
Corporation Operating in Aotearoa/New Zealand.
(http://canterbury.cyberplace.co.nz/community/CAFCA/publications/Roger/Roger2013.pdf).

Rio Tinto won the Roger Award that year. Despite having been written
several years ago, this is still very timely. Once again, the
transnational was threatening to close the smelter and leave the
country, unless the (Key) government gave it a multi-million-dollar
subsidy. Guess what happened?

Toxic Waste Liability Dumped On Taxpayers

“Aluminium smelting is known to be environmentally damaging, and for
many years the waste product from smelting has been dumped in a landfill
at Tiwai Point. Rio Tinto’s Financial Reports have long included an
amount calculated to provide the environmental restoration necessary
when it finishes its activities there”.

“In its analysis of the economics of the NZ aluminium smelter, the
Treasury had commented on the limited public information about the
smelter’s ‘obligations to remediate the site at Tiwai Point’, noting
that the closure plan to ‘cover, shape and revegetate the area...is not
a public document’. Treasury also noted there was a provision in New
Zealand Aluminium Smelters’ Financial Reports, but that ‘the provision
is not backed by a cash reserve and only the assets of NZAS (mostly
plant) support it’.

“It is interesting to note that in 2012, the Government’s Financial
Reports disclosed for the first time a Government indemnity (emphasis
added) issued to the ‘New Zealand Aluminium Smelters and Comalco. The
indemnity relates to costs incurred in removing aluminium dross and
disposing of it at another site if required to do by an appropriate
authority. The Minister of Finance signed the indemnity on 24 November
2003. In February 2004 a similar indemnity was signed in respect of
aluminium dross currently stored at another site in Invercargill’”.

“It is difficult to know what to make of this new information, other
than that it implies yet more taxpayer funding of Rio Tinto’s
activities. Does the indemnity relate to all waste dumped in the Tiwai
Point landfill over the 40 years of Rio Tinto’s activities in New
Zealand or does it relate only to some? Rio Tinto’s Sustainability
Report for 2003 makes the following comment:

 “‘In December 2003, Environment Southland granted resource consent for
NZAS to dispose of dross, a waste product from the aluminium production
process; that had been stored in a Bluff warehouse for many years. The
material originally belonged to NZAS, but was sold to a recycling
company that closed suddenly in 1991”.

 “The Ministry for the Environment, P&O (the owners of the warehouse) and
NZAS have worked together to facilitate the movement of the dross to the
NZAS landfill. NZAS has provided the landfill facility. P&O has paid for
the transport and the Ministry has provided an indemnity in the unlikely
event that the dross material ever has to be removed from the Tiwai
landfill’ (emphasis added)”.

 “Even as it prepares to depart New Zealand, it appears that Rio Tinto is
leaving a legacy of thousands of tonnes of aluminium dross deposited in
the Tiwai Point landfill that it will cover and plant over but, should
this turn out to be toxic and require removal, the liability to remove
it has, it seems, been transferred to New Zealand’s taxpayers”.

Campaign Against Foreign Control of Aotearoa

Box 2258, Christchurch 8140, New Zealand

cafca@chch.planet.org.nz

www.cafca.org.nz