Alcoa also has an aluminium plant at Portland with newer technology which employs a similar number of people and is not under review.
"A combination of factors, including metal prices, input costs and exchange rates, have resulted in the Point Henry smelter becoming unprofitable," said Alan Cransberg, Alcoa of Australia Managing Director. "Together with our employees, we have worked hard to minimise costs and improve margins, but the current situation makes it difficult for Point Henry to be globally competitive in the foreseeable future. Our goal is for Point Henry to continue operating and meet its profitability targets. However one possible outcome of the review is that production at Point Henry may be curtailed. I know this is unsettling news that creates uncertainty for our employees and the many people that depend on the smelter for their livelihood. We will do all we can to ensure the smelter is competitive."
The aluminium rolling mill at Point Henry and Anglesea power station are not included in the review which aims to be completed by June 2012. Alan Cransberg said that the review into the Point Henry smelter had not been prompted by the price on carbon due to be introduced from July 1st 2012, but is primarily due to low metal prices, a high Australian dollar, and input costs. He said that the Point Henry smelter is already losing money and the carbon price would just add to that situation.
Alan Cransberg told the Age that the smelter had boosted productivity by 20 per cent in the past four years, but that this was still insufficient in reducing costs to make the plant competitive.
Watch as the Australian Workers Union pushes politicians from both sides to work out ways to increase inefficient subsidies to keep the plant open. "It should have been upgraded during the many, many good years. The company's lack of investment in Point Henry amounts to exploitation of the people of Victoria, and of Geelong in particular." said AWU Victorian Secretary Cesar Melhem. "To turn around now and consider cut-backs, or worse, is outrageous, particularly in the light of the assistance given the company over the years in terms of energy concessions."
"There should be urgent talks at the highest levels of government to prevent this major employer and exporter from doing a slash and burn without consideration for the workers and the state that has supported it." said Cesar Melhem. "Both Alcoa at Point Henry and Portland have been the subject of cost-cutting over recent years. However, at this time there is no question mark over the future of the Portland operation, simply because the company has invested in the latest technology there," he said.
If the smelter is already losing money with heavy subsidisation of carbon intensive coal fired electricity costs by the state Government, then maybe it is time for this energy intensive and inefficient smelter to close. The state Government in October 2011 renewed the Alcoa Anglesea Coal Mine 50 year lease extension despite community concern and opposition.
Closing the smelter would reduce the power requirements from the Anglesea power station which could easily transfer it's power generation to wind farms, and in the future, wave powered and geothermal energy production. The money saved from subsidising inefficient and carbon polluting industries could be directed to skills retraining and relocation for affected workers in the smelter and power station. But with the Baillieu government beholden to the anti-wind farm lobby with Future wind power development in Victoria stifled by draconian planning regulations, I doubt this is going to happen.
- Alcoa press release, 8 February 2012 - Point Henry Review
- The Age, 8 February, 2012 - 600 jobs at risk as Alcoa battles soaring dollar
- Australian Workers Union News, 8 February 2012 - AWU calls for urgent action to ensure future of Alcoa Pt. Henry
- Climate Citizen, 8 December 2011 - Alcoa Anglesea Coal Mine 50 year lease extension approved by Victorian Government
- Climate Citizen, 8 December, 2011 - Future wind power development in Victoria stifled by draconian planning regulations