Tom Arup and David Wroe June 29, 2012
The Gillard government has extended lifelines to Alcoa’s Geelong plant and the Energy Brix coal firm in the Latrobe Valley, a move that saves hundreds of jobs but carries a price tag of $90 million.
The bailouts, which will keep the Point Henry aluminium smelter and the Energy Brix plant in Morwell going for another two years, come amid fierce debate over the carbon tax, just two days before the tax comes into effect.
Alcoa has said that the high Australian dollar and low international metal prices, rather than the carbon price, was responsible for the plant’s problems. However Energy Brix stated explicitly that the carbon price was a factor in the review of its operations.
Treasury modelling of the government’s carbon pricing scheme estimates that aluminium production in Australia would decline by 61 per cent by 2050.
Energy Brix welcomed the bailout but in a written statement gave no specific information about potential layoffs, saying on that the company would ‘‘continue to engage with its workforce and unions on any business restructuring’’.
Also today, the government announced it was extending the deadline on the contract-for-closure program, a key plank of the carbon price package that aims to shut down about 2000 megawatts of power delivered by Australia’s dirties power stations.
Energy Brix was one of the plants that applied for that funding.
The other plants that have applied are Hazelwood, Yallourn, Playford and Collinsville.
The deal with Alcoa will see 60 to 65 jobs go from the site from a staff of 600.
Alcoa managing director Alan Cransberg said the challenge over the next two years would be to secure the plant in the long term as it faces a high Australian dollar and falling world metal prices.
The rescue money will be used for capital investments and repairs, energy efficiency and staff development.
Federal Industry Minister Greg Combet said the government was very concious of the problems facing the global aliminum industry. He said Alcoa's problems were not a result of the carbon tax.
''It is extremely important for the employees of the smelter - 600 people directly employed - but also for many others in Geelong and the surrounding region,'' Mr Combet said.
''This is a very important facility for the economy of Geelong and Victoria and the country.''
Mr Combet said the money was conditional on the smelter remaining open for the next two years and production staying at comparable levels to now. He said if production rates fall the company will have to pay back money on a pro rata basis.
Premier Ted Baillieu said he disagreed with Mr Combet that the carbon tax would not have an impact an Australian aluminium smelting.
''But we are pleased Point Henry will continue for the next two years, and we will continue to work with Alcoa, and we will continue to work with the Commonwealth, to enhance Point Henry's future, and to enhance Alcoa's future,'' he said.
Mr Baillieu refused to say how much the State Government had contributed to the bailout.
But he said the State Government would commit $4 million extra to an industry support package for the broader Geelong region.
The state government has, meanwhile, pledged $4 million for an industry fund to help suppliers who work with Alcoa, Premier Ted Baillieu said.
In a joint statement, Mr Combet, Energy Minister Martin Ferguson and Regional Development Minister Simon Crean said the ‘‘restructuring package’’ was needed because Energy Brix supplied fuel to many local businesses on which more than 2500 jobs rely.
The firms, including power generators, abbatoirs, horticultural and char producers, and food and dairy processors, had no alternative source of fuel and needed time to switch to cleaner fuels such as gas, they said.
Last month, HRL subsidiary Industrial Energy, which owns the plant, announced it was reviewing the operation, which was ‘‘expected to be unsustainable under a business-as-usual scenario’’ because of the carbon tax.
The government’s statement today said the bailout was ‘‘consistent with the commitment of the Gillard Labor government to enabling a smooth transition to a clean energy economy that is well managed, fair and supports regional jobs’’.