Tehan calls for Portland smelter cost protection

WANNON MP Dan Tehan will urge federal cabinet to scrap a forecast $10 million bill for the Portland Aluminium smelter under the controversial Renewal Energy Target (RET).

He and several other rural MPs are calling for the aluminium industry to be exempt from RET charges estimated to cost smelters $80m a year in 2017 and put jobs at risk.

Portland smelter’s generous electricity deal with the state government expires in 2016 leaving it with the full impact of prevailing power market rates and the RET.

“The impact of the RET on the Portland smelter will be the equivalent of 75 full-time jobs,” he told The Standard.

“I’m not saying there will be job cuts, but the RET adds additional costs at a critical time when the dollar exchange is high and export returns are falling.

“With one smelter in Australia closed and the Point Henry smelter due to close soon, it’s not time to be adding to operating costs.

“The industry employs 5000 people nationally and produces the equivalent of $3 billion a year in exports.”

Portland Aluminium uses 10 per cent of the state’s electricity production, most of which comes from the coal-fired power stations in the Latrobe Valley, and has a subsidy deal in place since the facility opened in 1986.

It is estimated the low power price arrangement has cost the state about $2 billion over 20 years.

Alcoa yesterday told The Standard it did not get a subsidy from the Victorian government, but rather a “commercial arrangement to supply power to the smelter”. 

“The Victorian and regional economies have benefited enormously from the smelter’s presence,” Alcoa corporate affairs general manager Brian Doy said.

“That commercial arrangement expires in 2016.

“Because of its electricity intensity, the aluminium smelting industry is impacted by RET to a far greater extent than any other Australian industry. 

“Current estimates are the RET liability associated with aluminium smelting in Australia is in the range of $70 million to $80 million a year.”

He said the company would not disclose the financial situation of its plants, but current and forecast RET liabilities would be a major impost particularly with “unprecedented” economic circumstances facing the aluminium industry due to low metal prices and the high Aussie dollar.

State government comment was not available yesterday.

Portland Aluminium employs about 725 staff and produces about 358,000 tonnes of aluminium annually which is exported to the Asian market earning the equivalent of $649 million a year.

The company says it puts $100 million in wages, $45 million in maintenance and contractor services and $7 million in council rates, royalties and community contributions into the Portland region each year.

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