Aardvark Daily

Please visit the sponsor!

New Zealand misses the AI bus

Every few years, Rio Tinto makes a big noise about how hard-done-by they are and how they need cheaper electricity prices for their aluminium smelter or they'll pull out of New Zealand.

Every time this happens, the government of the day capitulates to the pressure and gives away one of our increasingly valuable and essential resources -- renewable electricity.

No government wants to take the risk that a large multinational will close down a plant that effectively provides employment for thousands of people, especially in a relatively sparsely populated region like Southland -- so they all roll over and sell out the NZ taxpayer in the name of expediency.

What a mistake that has turned out to be; perhaps.

Last time the big multinational started touting its financial blackmail I said "let them go, we have far better uses for that electricity" -- but nobody (in power) was listening.

However, imagine if we hadn't once again agreed to effectively give away all that electricity to a greedy multinational in return for a handful of jobs for locals...

Imagine if we had all that electricity now available for... AI datacentres!

Yes, one of the biggest problems facing the growth of the AI industry is a lack of energy, yet here in NZ we could have rolled out the welcome mat and offered those corporations who are presently investing billions in datacentres the perfect place to build.

It is the lack of sufficient electricity supply that is, in a large and growing number of cases, significantly constraining the AI industry's ability to grow and expand its resources. New Zealand could have been a highly desirable place to set up shop, if Rio Tinto weren't being handed what amounts to almost unlimited near-free electricity instead.

The aluminium maker has complained repeatedly that it needed that near-free electricity to remain viable but a look at prices over the past 10 years show a clear upward trend, despite significant month-to-month volatility with a massive 72 percent overall hike since 2020.

I can't ever recall buying some aluminium sheet or bar stock only to find that the price had gone down -- the price of this stuff is always going up so the tale of woe that Rio Tinto keeps trotting out to our government makes me wonder about the calibre of those in the halls of power wo fall for this.

So now we have the fastest growth industry in history actively looking for places where it can find enough electricity to support its seemingly insatiable demand -- and we're tied to throwing our energy away to preserve a handfull of jobs and jack up Rio Tinto's US$42 billion annual profits.

What a lost opportunity.

Imagine how much we could have got for that electricity if we'd only boxed-clever instead of falling for some poor mega-corporation's fake sob-story. The reality is that if we were selling that power at market rates, we could afford to pay those 2,000 workers to live a life of luxury without ever having to work again *and* we'd still be better off.

Think of that, next time you pay *your* power bill and wince at the reality you are subsidising a multinational's multi-billion dollar a year profits whilst denying our country the chance to earn serious coin from the AI revolution.

Carpe Diem folks!

Please visit the sponsor!

Here is a PERMANENT link to this column

Rank This Aardvark Page

Change Font