Friday, June 14, 2013

Time for Invercargill to buy the smelter?

Rio Tinto has written down the value of Tiwai Point to next to nothing:

The Australian majority owners of the Tiwai Point aluminium smelter, Rio Tinto, have written more than half a billion dollars off the value of the ageing plant, leaving it with a value on its books of just $14.8 million, from $606.9 million previously.

The decision was made in February but has been only disclosed today with the lodging of financial accounts with the New Zealand Companies Office for Rio Tinto Alcan NZ, the subsidiary that owns 79 per cent of the smelter, which has operated near Bluff since 1971.

Which raises the question: if its that cheap, why doesn't Invercargill try and put together a local consortium to buy it? If they seriously believe it has a future, this seems like an excellent opportunity for them to put their money where their mouth is (and reap the rewards if they're right).