Labour has joined National and New Zealand First in seeking an extension to the closure of the Tiwai Point aluminium smelter, promising to negotiate an extra three to five years to save jobs.
Labour is also sticking to its promise of a transition plan in Southland to be developed by local leaders and the community, to develop new industries that are "future-focused" and help to ease the loss of the smelter.
"By providing an extended time frame for the closure of the smelter we protect jobs now and give the community time to consider and plan for future opportunities, looking at new jobs for the region," Labour leader Jacinda Ardern said on Monday.
The facility at the Tiwai Peninsula, across the harbour from Bluff in Southland, is New Zealand's only aluminium smelter. It is 79.36 percent owned by Rio Tinto and 20.64 percent owned by Japan's Sumitomo Chemical Company.
Despite receiving 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, Rio Tinto announced plans to shut up shop because of high energy costs.
The smelter is set to shut in August 2021 and the Government has so far refused to give it any more bailouts. But with approximately 2260 full-time equivalent jobs affected, political parties are scrambling to find the right solution.
NZ First leader Winston Peters was the first of the political party leaders to call for an extension to the closure of Tiwai Point, and he revealed earlier this month that he would commit to a 20-year deal to keep the smelter going.
A 20-year deal is more than the five year transition period sought by the Gore District Council which would allow time to make grid investments so that electricity freed up by the closure of Tiwai could be transported north.
National leader Judith Collins has also committed to keeping the smelter in operation for at least the next five years to lessen the severity of a sudden closure.
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."
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 negotiated so the smelter can commit to a future beyond the proposed closure date.
Labour is also promising to support Transpower to reach a fair price for transmission costs so power prices stay reasonable for other consumers.
"Extending the life of the aluminium smelter requires an agreement on electricity transmission costs," said Labour's energy and resources spokesperson Megan Woods.
"Normally, any reduction in transmission costs for a major customer like the smelter would result in higher prices for other consumers. Labour will negotiate a way forward to keep the smelter operating and prevent extra costs falling on other consumers.
"We'll do this by supporting Transpower to form an agreement with the smelter that preserves jobs in the medium term and gives Southland time to build a new economic future."
Gore District Mayor Tracy Hicks was part of discussions with Dr Woods and Finance Minister Grant Robertson last month, and he confirmed the Government had been in negotiations with Rio Tinto and Meridian Energy.
He said the closure of Tiwai Point 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."
Labour is promising to expand the 'just transition' unit within the Ministry of Business, Innovation and Employment (MBIE) - which has been helping Taranaki leaders work on the region's transition away from fossil fuel - to Southland.
Labour will invest an additional $5 million per year into the programme.
Southland has already received $72 million through the Provincial Growth Fund in projects such as $19.5 million for the Invercargill inner-city redevelopment, $8 million for aquaculture and $3 million for Stewart Island wind power.
