The project, which was announced by Government on 21 May, will see the Government partner with New Zealand Steel for it to build and operate an electric arc furnace at Glenbrook Mill. This will see renewable electricity and scrap steel replace coal and ironsand for half of the Glenbrook factory’s steel production, with resulting circular economy benefits.
It is expected to reduce New Zealand’s total annual emissions by one per cent in a single project; equivalent to 300,000 cars being taken off the road, totalling more than five per cent and three per cent respectively of New Zealand’s required emissions reductions from 2026 to 2030 and from 2031 to 2035.
Market-leading climate change lawyer and Bell Gully consultant, Simon Watt said, “we are delighted to be involved in supporting EECA on New Zealand’s largest emissions reduction project to date, which represents a leap forward on New Zealand’s path to net zero carbon emissions, for the country’s economic transition and in decarbonising industry. We are thrilled for EECA, in particular its Chief Executive Andrew Caseley, whose leadership delivered a remarkable transaction while taking care to protect the Crown’s interests.”
Corporate associate Matt Fowler, together with Simon Watt, supported EECA on this transaction.
The funding agreement is for up to $140 million co-funding from the $650 million Government Investment in Decarbonising Industry (GIDI) Fund, which enables partnerships with industry to reduce their emissions, with the balance for the electric arc furnace to be funded directly by NZ Steel. The funding is conditional on, among other things, a full feasibility study being completed and necessary regulatory settings being achieved. The funding is split into three components:
- base build funding support up to $110 million;
- an additional $10 million commissioning funding incentive paid if NZ Steel can commission the electric arc furnace by January 2027; and
- a further $20 million of performance funding paid against NZ Steel achieving a further 800,000 tonnes of emissions reductions by 31 December 2030 over and above the base amount committed to in the funding agreement.
KPMG, led by partner Jesse Phillips, were also instrumental as the commercial advisors for EECA. Chapman Tripp, led by partner Mark Reese, acted for NZ Steel on this matter.