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New Zealand Aluminium Smelters Ltd Climate Change Approach. Stewart Hamilton Business Improvement Manager. Introduction. Business Improvement Manager Support Business Improvement by developing operational expertise to deliver sustainable value
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New Zealand Aluminium Smelters LtdClimate Change Approach Stewart Hamilton Business Improvement Manager
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
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
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
How Aluminium Is Produced 2 tonnes Alumina 1 tonne Aluminium
World Aluminium Production Aluminium Smelter Alumina Refinery Bauxite Mine • ~45 Million Tonne of Aluminium (Primary and Recycled) • ~350 Million Tonne of CO2-e • ~5x New Zealand Emissions
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
NZAS Rio Tinto Aluminium (79.36%) Sumitomo Chemical Company (20.64%)
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 NZ$1.4bn • Using 13% of all NZ Electricity
NZAS Greenhouse Gas Emissions • NZAS CO2-e Direct Site Emissions 680,000 tonne/yr
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
NZAS Competitive Challenges • Reducing Emissions (technical risk) • Technical Limit to the Process • NZAS at World’s 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
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
NZAS Sustainable Approach License to Operate Cost & Revenue
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
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
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
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
NZAS Aluminium Recycling • A cornerstone of Sustainable Practices • RTA Partnership developed with End-User Customer in NZ • 3600 tonnes of Aluminium recycled in 2006
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
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
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
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
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
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 R&D 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
New Zealand Aluminium Smelters LtdClimate Change Approach Stewart Hamilton Business Improvement Manager