Shane Jones: Associate Energy Minister on the possibility of two mills in Ohakune being closed

Associate Energy Minister Shane Jones is calling the possibility two mills could close - 'hideous' - with the loss of 300 jobs.

Winstone's says ballooning energy bills could force the Ohakune pulp and timber mills to shut.

Jones is urging the energy companies to offer these industrial players a deal to keep them going. 

"My problem is - if they don't start to engage and actually look after New Zealand firms and New Zealand employers, then I fear for the industrialisation." 

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Episode Transcript

Speaker 1 (00:00):
Now, electricity prices are threatening two mills near or Hakune.
Winston Pulp International has paused operations at the mills for
a couple of weeks because the power price is simply
too high to profitably run the mills. Now, if they
shut down completely, it means up to three hundred people
could lose their jobs. Shane Jones is the Minister for
Regional Development also the Associate Energy Minister and with us now,
hey Shane, hey, killer folks, what do we do about this?

Speaker 2 (00:25):
Oh hideous news? Obviously, I'm hopeful that the gent tailors,
the big energy companies start to offer our big forestry producers,
manufacturers and other related industrial players a deal that's not
dissimilar from what they offered Rio Tinto down there in
the cargo.

Speaker 1 (00:45):
Are they going to though? Is that realistic?

Speaker 2 (00:48):
Well? The difficulty is that ministers can't command Mercury, Meridian,
Genesis contact to do anything. They only listen to the
managers and the directors of those companies. But my problem
is that if they don't start to engage and actually
look after New Zealand firms, New Zealand employers, then quite frankly,

(01:12):
I fear and the industrialization.

Speaker 1 (01:14):
Yeah, I think that is obviously happening right at the moment.
I mean, do you have any indication that the power
companies are going to offer sweetheart deals?

Speaker 2 (01:22):
Well, look the precedents there the Rio Tinto. Whether or
not you call it a sweetheart deal, I mean, it's
over what period of time power is made available to
these factories. And now, sadly I'm not running any of
those forestry manufacturers, but they seem to be saying, and
we have to take them at their word, that the
costs associated with access to electricity makes their operations marginal

(01:46):
in New Zealand, which is an indictment on you and
I as New Zealanders, because a historic advantage of doing
business in Kiwiland was affordable energy.

Speaker 1 (01:56):
But Shane, you know what you're saying, right, if they
offer deals like they offered to Riot, you and I
as households are going to pay for that, because we
pay for Rio Tinto.

Speaker 2 (02:06):
Well, the reality is that if you offer a deal
over a long period of time, then it's no different
than a long term interest or a long term currency fix.
Then the price comes down. It doesn't necessarily mean that
you and I have to pay more prices. What is
bedeviling you and I as Garden variety key eases is
not enough energy in the company, and that takes us

(02:28):
to whether or not the regulatory settings are such that
it's encouraging competition. And that's why I've been working on
some ideas which I shall submit to my fellow ministers,
in particular the senior Energy Minister. And maybe it's a
time to have a deep dive and ensure that we've
got the right regulatory settings for competition and new investment

(02:50):
if we haven't, and what do we need to do
to expedite that new investment. What are you thinking, Well,
we're looking at obviously there's an interest offshore, wouldn't but
that's going to take a while. I'm told by the
existing investors in the gas industry that there are things
that can be done in the short term to incentivize
them to do more work, and officials are giving us

(03:13):
advice about that. And as much as it pains me
to say, Meridian, I am told are interested in moving
towards the importation of aling and New Zealand that would
supply gas fire power stations, and of course this will
enrage the Greens who want a cure. Well, that will
depend on what sort of contract you can strike. I mean,

(03:35):
the Aussies have found that the spot price and globally
has been very expensive for them. And I'm not promoting it,
but I have to acknowledge that this is what Meridian
and others apparently are interested in.

Speaker 1 (03:48):
Is anybody using the word crisis, electricity crisis, energy crisis
with you?

Speaker 2 (03:53):
Oh? I think that the people that have spoken to us.
I mean, obviously I had a meeting with Breakfast with
Winston's a while ago and they explain this situation to me.
I understand the Forest Minister, they're certainly using the word crisis.
I mean, the difficulty is if we have a continually
rising cost of electricity and the only way to deal
with that problem is to rapidly expand supply. And that's

(04:15):
why the fast track legislation, no doubt in my mind,
will prove to be incredibly useful, so we can accelerate
the development of wood palms, solar farms, hopefully some more hydro.
And you know, we have an inordinately rich resource in
New Zealand, which is the geothermal energy, and geothermal energy
drilling in other countries goes down five or six kilometers
into the earth and you tap into what's called hot rock,

(04:40):
not quite at the magma, and that is a profound
geothermal resource, but it will probably require the Crown and
the Science Institute owned by the Crown to do the
exploratory work.

Speaker 1 (04:51):
Well, it's some best of like getting that paper before
the other ministers and look forward to you coming up
with some solutions. Shane appreciated that. Shane Jones, Minister for
Regional Development. For more from Hither Duplessy Allen Drive, listen
live to News Talk Set B from four pm weekdays,
or follow the podcast on iHeartRadio