Managing director Alan Cransberg visited Portland yesterday to meet with business leaders and staff at the town's aluminium smelter.

His appearance follows news of an electricity supply contract that will see Alcoa's two Victorian smelters run on brown coal until 2036.

Residents and the Glenelg Shire have welcomed the deal and the security it offers local families, though environmental groups are angry cleaner energy sources have been ignored.

"One of the issues about doing business in Victoria, is that if you want power - and smelters need a considerable amount of power - 86 per cent of the power generated in the state is from coal," Mr Cransberg told The Standard yesterday.

"We've looked at many, many options.

"We looked at building our own power station, looked at the availability of gas, the availability of renewables.

"Frankly, the market isn't there. For the quantities we need, we had one option and that was to go with coal-fired power."

The new contract, forged with Latrobe Valley generator Loy Yang Power, includes options for Alcoa to obtain more than its initial base electricity load of 820 megawatts.

Among its provisions is a joint carbon reduction agreement, which detractors have argued is alarmingly light on detail.

"Together, we'll look at what we can do to reduce the footprint," Mr Cransberg said. "It might be carbon capture; (Loy Yang) have got some algal opportunities there to reduce carbon.

"There just isn't a big enough market in renewables or other areas, but over time we'll look at those opportunities.

"There's flexibility in the contract to incorporate some of that."

The Alcoa chief said it was important to meet with those who directly benefited from a secure smelter power source.

"It's just great fun to see the reactions from people," he said.