Alcoa still positive about Wagerup alumina refinery expansion plans

Alcoa is keeping alive the dream of a billion-dollar expansion of its Wagerup alumina refinery in the South West after asking the State Government for more time to hold on to the all-important environmental approval.

Alcoa of Australia managing director Michael Parker said the process to seek a further five-year relief was under way, a decade since the company was first given the green tick to proceed with expanding Wagerup refining capacity to 4.7 million tonnes a year.

However, the expansion was put on hold on economic grounds. Already a world-class asset, the expansion would almost double Wagerup’s refining capacity and generate much-needed jobs in the South West.

Mr Parker cautioned that the expansion proposal was still “largely on hold given the market conditions” though it was important to retain the option, which is why Alcoa was applying for a third five-year relief period for what is considered the most important regulatory sign-off required.

“In the past construction costs got to the point where it (the expansion) wasn’t economically viable (and) we had concerns about finding a long-term energy solution but it (the extension) is something we obviously still feel we would like to get so the option remains and we can further evaluate it,” he said.

Although global aluminium demand outlook remains strong, a flood of supply has severely impacted the metal and alumina’s price.

Mr Parker, who in addition to running Alcoa in Australia is in charge of its global refining network, said alumina prices had slumped from levels around $US350 a tonne in the middle of last year to just above $US200/t.

“It doesn’t matter whereabouts you are in the world and what assets you are running, there is a significant part of the industry today that is either struggling to be break-even or is under reasonable financial pressure,” he said. He would not discuss whether Kwinana, the oldest and highest-cost of the three South West refineries, was profitable again. It was losing money in 2013, unlike the newer plants at Wagerup and Pinjarra.