Investors dump power companies on smelter scare
The S&P/NZX 50 Index fell 236.60 points, or 2.1 percent, to 10,853.79. Within the index, 30 stocks declined, 10 rose, and 10 were unchanged. Turnover was $228.9 million, of which Meridian alone accounted for $57.4 million.
The electricity generator-retailers all fell after Rio Tinto, which controls New Zealand Aluminium Smelters, said it was reviewing the smelter's future after rejecting Meridian's proposed pricing. The smelter secured a $30 million sweetener in 2013 when it strong-armed the then-government during power supply negotiations. Energy Minister Megan Woods today said the government won't provide more financial support.
Meridian chief executive Neil Barclay said the company put forward a number of proposals and concessions to the smelter's owner, but that its offer fell short. He said he was still open to negotiations. Meridian dropped 8.7 percent to $4.95 on a volume of 11.5 million shares, more than eight times its 1.4 million 90-day average.
Contact was hit even harder, leading the market lower as it fell 9.7 percent to $7.69 with 3.7 million shares changing hands, well up on its 1 million average. Mercury NZ dropped 8.4 percent to $4.995 with 4.8 million traded, Genesis Energy fell 6.1 percent to $3.06 and Trustpower was down 3 percent at $8.34.
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