New Zealand Aluminium Smelters Ltd Climate Change Approach

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New Zealand Aluminium Smelters LtdClimate Change
Approach
Stewart Hamilton Business Improvement Manager
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Introduction

• Business Improvement Manager
• Support Business Improvement by developing
  operational expertise to deliver sustainable
  value
• Move business towards strategic performance
  targets in Key Result Areas
• Health and Safety
• People Commitment
• Environment and Communities
• Market Position
• Operational Excellence
• Financial Strength

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NZAS Climate Change Approach

• World Aluminium Industry
• NZAS Performance in the Industry
• NZAS Approach Sustainable and Technical
• Role of Aluminium as part of the solution
• NZAS Approach - Communities and Policy

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NZAS Climate Change Approach

• World Aluminium Industry
• NZAS Performance in the Industry
• NZAS Approach Sustainable and Technical
• Role of Aluminium as part of the solution
• NZAS Approach - Communities and Policy

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How Aluminium Is Produced
2 tonnes Alumina 1 tonne Aluminium
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• 45 Million Tonne of Aluminium (Primary and
  Recycled)
• 350 Million Tonne of CO2-e
• 5x New Zealand Emissions

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NZAS Climate Change Approach

• World Aluminium Industry
• NZAS Performance in the Industry
• NZAS Approach Sustainable and Technical
• Role of Aluminium as part of the solution
• NZAS Approach - Communities and Policy

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NZAS
Rio Tinto Aluminium (79.36)
Sumitomo Chemical Company (20.64)
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NZAS Operations Summary

• 20th largest Aluminium Smelter (out of 200)
• Producing 350,000 tonnes aluminium/year
• Producing the highest purity aluminium in the
  world
• Export revenue NZ1.4bn
• Using 13 of all NZ Electricity

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NZAS Greenhouse Gas Emissions

• NZAS CO2-e Direct Site Emissions 680,000 tonne/yr

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NZAS Performance

• Reduced absolute site CO2-e by 41 since 1990
• Top 10 Carbon Intensity of World Smelters
• Top 20 Energy Efficiency of World Smelters

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NZAS Competitive Challenges

• Reducing Emissions (technical risk)
• Technical Limit to the Process
• NZAS at Worlds Best Practice for Cohort Group
• Cost of Emissions (business risk)
• Electricity represents 40 of NZAS costs
• Selling on a International Commodity Market
• Competitiveness at Risk
• Carbon Leakage Risk
• NZ Power Generation high proportion of
  renewables
• Net Emissions Lower from NZ Aluminium Production

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NZAS Climate Change Approach

• World Aluminium Industry
• NZAS Performance in the Industry
• NZAS Approach Sustainable and Technical
• Role of Aluminium as part of the solution
• NZAS Approach - Communities and Policy

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NZAS Sustainable Approach
License to Operate
Cost Revenue
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NZAS Sustainable Approach

• Sustainable Business comes from Governance in
  both
• License to Operate
• Cost and Revenue
• Systems Developed to Support a Culture of
• Attention to Detail Procedures and Data
  Management
• Continuous Improvement
• Rewarding behaviour Aligned with our Goals and
  Values

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Approach to Technical Challenge

• Business Improvement Projects Six Sigma Rigor
• Adapt and Adopt
• 5-15 Million per year
• 15 Full Time Project Leaders
• DC Power efficiency - Project 200
• Process Carbon Efficiency Froth Flotation
• PFC reduction (Anode Effects) Process Control
• Fuel Combustion Efficiency
• Recycling of Extrusion Scrap

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NZAS Climate Change Approach

• World Aluminium Industry
• NZAS Performance in the Industry
• NZAS Approach Sustainable and Technical
• Role of Aluminium as part of the solution
• NZAS Approach - Communities and Policy

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Aluminium as Part of the Solution
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Aluminium Life Cycle

• 706 million tonnes produced (since 1888)
• Approx ¾ of this still used
• Recycling aluminium requires 95 less energy than
  primary aluminium smelting
• Recycling of aluminium today saves an estimated
  84 million tonnes of CO2-e per year
• Recycling the metal still in use 15 years
  primary aluminium output

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NZAS Aluminium Recycling

• A cornerstone of Sustainable Practices
• RTA Partnership developed with End-User Customer
  in NZ
• 3600 tonnes of Aluminium recycled in 2006

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Aluminium Offset

• 60-75 of vehicle fuel use is weight related
• Typical aluminum parts 40-50 lighter than a
  comparable steel part
• 1 kg of aluminium used as replacement 20kg of
  CO2 over lifetime

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NZAS Aluminium Offset

• For other vehicles, such as trains, ferries and
  aircraft the potential savings are even greater
• 18,000 tonnes per annum of NZAS high purity
  aluminium is supplied to European aerospace
  industry

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NZAS Climate Change Approach

• World Aluminium Industry
• NZAS Performance in the Industry
• NZAS Approach Sustainable and Technical
• Role of Aluminium as part of the solution
• NZAS Approach - Communities and Policy

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NZAS Community Approach

• Energy Efficiency Extends beyond the gate
• Retrofit all Bluff homes with high quality
  insulation products

• NZAS provide financial backing and support
  contractors in project safety and project
  management
• 200 homes complete to date

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NZAS Policy Approach

• Business as Usual is NOT an option
• Short term simple options that do not
  compromise long term policy
• Voluntary agreement leveraging off NGA framework
• Options to promote renewables and offsets
• Medium to Long term Emissions Trading Scheme
• Enable lowest cost abatement - deploy low
  emissions technology
• Design complex - Allocation principles impact
  on Electricity pricing
• Market mechanism to aid technology development..?
• Emissions Permit Allocation
• Recognition of prior action Credit for Early
  Action
• Competitiveness at Risk

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Climate Change - A Business Driver

• NZAS will continue to target and work on Climate
  Change Impacts irrespective of current policy
  uncertainty
• Expectation that there will be a price on carbon
• Set meaningful targets to reduce Energy and GHG
• Incorporate in employee incentive payment scheme
• Deploy strategic improvement projects
• Invest in RD to reduce the GHG intensity of our
  processes
• Work with industry groups and governments in
  policy formulation
• Investigate offset projects on and off site
• Promote recycling and the life cycle benefits of
  Aluminium usage
• These approaches are almost always cost effective

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New Zealand Aluminium Smelters LtdClimate Change
Approach
Stewart Hamilton Business Improvement Manager