National leader Judith Collins is joining NZ First leader Winston Peters in calling for the Tiwai Point aluminium smelter near Invercargill to remain open.
Majority owner Rio Tinto announced in July it will close the facility - New Zealand's only aluminium smelter - in August 2021, putting approximately 2260 full-time equivalent jobs on the line.
Rio Tinto said a review concluded the business was no longer viable given high energy costs, despite a deal struck in 2007 with Meridian Energy for the continuous supply of power until 2030 at reduced rates.
Collins said on Friday National wants to create a commercially viable outcome that would keep the smelter in operation for at least the next five years, lessening the severity of a sudden closure on Southland.
The Gore District Council has called on the Government to facilitate a five-year wind-down period, which it says would allow for a more suitable transition.
Collins said National understands Meridian Energy - which owns the Manapouri power station that feeds the smelter - has offered a "positive electricity price" to Rio Tinto, based on the power company's potential loss if the closure goes ahead as planned.
"Based on this, we understand that a commercial deal could be reached," she said. "That deal alone would result in a more reasonable operating environment for the smelter's operators, but National would do more."
Collins said another factor is the cost of electricity carriage charged to the smelter by Transpower, the state-owned enterprise responsible for electric power transmission in New Zealand.
She said National wants to see the current transmission price path negotiated to a point the smelter can commit to a future beyond the proposed closure date.
"In exchange for this deal, we would require a plan from Rio Tinto for the clean-up of the site and dealing with the waste when it closes," she said, "while creating certainty in the medium-term for Southland, National would have an eye to the future."
Collins said National wants to increase Transpower's investment into transmission lines upgrades to ensure Manapouri power station is not left stranded in the future, allowing the electricity to be available to the wider economy.
This is another concern raised by the Gore District Council, which said electricity freed-up by the closure of the smelter will not be able to be transported to major demand points in the north for five to seven years as major grid investments have not yet been made.
The smelter has received hundreds of millions of dollars in direct and indirect Government subsidies over the years, including a $30 million bailout under former Prime Minister John Key. The current Government has no plans to offer more.
Finance Minister Grant Robertson, after Rio Tinto announced the closure, said there was a "sense of inevitability" about it, and said the Government would help the region transition into new areas of work, such as agriculture, aquaculture and manufacturing.
But coalition partner NZ First wants to keep the facility open.
Peters delivered a fiery speech to Southlanders last month, taking a swipe at Prime Minister Jacinda Ardern by asking locals if they felt "victimised", "marginalised" or "Cinderella-ised" over the Government's refusal to step in and help the smelter stay open.
ACT leader David Seymour criticised Peters' remarks at the time as "ironic".
"Peters is campaigning like he is in Opposition," he said. "Has he forgotten that he has been the Deputy Prime Minister for the past three years?"
Ardern planned to announce a roughly $100 million recovery package for Southland, but the idea was sunk by NZ First, which would prefer to save the smelter from closure.
Robertson and Energy Minister Megan Woods met with Southland leaders earlier this week to discuss the closure of the smelter next year, and Gore District Mayor Tracy Hicks said it had been a constructive discussion.
Hicks said Robertson was able to confirm that the Government supports a managed transition and that there are ongoing negotiations taking place, involving the Government, Rio Tinto and Meridian Energy.
Hicks said any Tiwai closure would be a significant issue for Southland voters in the upcoming election in October.
"While we appreciate nothing can be confirmed until after the election, it's critical that a solution which supports a managed transition period can be found shortly afterwards, along with a just transition financial package for the region."
