Rio Tinto: Tiwai Point will be fine, but Kiwis will be affected

With 14,000 workers going from Rio Tinto, the folk at Tiwwai Point’s aluminium refinery are apparently nervous. They have “787 full time staff and 133 contractors” down there in the deep South, a bit under 1% of Rio’s total of 110,000 staff and contractors. So Rio is getting rid of 12.7% of it’s workers, which would imply 116 folk from Tiwai.

Tiwai workers will be safe

Actually those 14,000 are from capital projects that Rio Tinto is extracting itself from, with most (7,500) of them contractors. Steady state plants like Tiwai that don’t have immediate expansion plans should be ok. I’m assuming that they don’t have expansion plans as any expansion would need more electricity, which we cannot provide.

Rio may ask Tiwai for some reductions, but it’s really hard to reduce staff in an aluminium refinery – they require people to do certain tasks and it’s bad practice to skimp on that. I’d be really surprised if they were that inefficient and bloated that losing staff was worthwhile. If they were, then the staff that would go would be in the management ranks, not the people on the floor. It’s especially hard to see much headcount reduction given that Tiwai was making some of the purest Aluminium in the world in recent years, though I am not sure how they are going these days. Finally it’s contractors first when these things happen. 

Tiwai is a 24/7 operation – and you cannot shut down for a periods as the molten alumina and aluminium in the pots will freeze. That’s not pleasant – I’ve seen a kilometer long potline freeze in South Africa and it is a long and expensive task to recover from that. So the plant will stay running, and (almost) everyone will stay. 

One option could be a sale of the plant, but the new owners wouldn’t make material changes in the operation, or in the tax payments to the NZ Government.

WA Kiwis

But this is big news for the thousands of Kiwis that have emigrated to Western Australia to chase the big bucks. Less capital projects means less scaffolding (notoriously scaffolders are often Kiwis and often cowboys), less boilermaking, building, drilling, mining, driving and engineering. Above all it means that the crazy money being offered in WA will now slowly or quickly go away. That will mean many of those Kiwis will choose to come back home, adding to any unemployment woes we have. 

BHP Billiton looks on

One of the reasons that BHP Billiton withdrew from the offer to buy Rio is apparently the assumption that Rio will now have to sell off assets to survive. Looks like they were smart in that assumption

About Lance Wiggs

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