Alcoa’s desire to invest brings a ray of light for struggling Portland Aluminium smelter

The struggling Portland Aluminium smelter in Victoria should have its future revealed within months, as its largest stakeholder Alcoa articulated a desire towards investment, only if affordable power could be secured.

Since 2019, the chances for the Portland smelter have looked gloomy, as during that phase Alcoa brought a program to closedown smelters that were financially and environmentally uncompetitive.

Portland Aluminium’s dependency on brown coal-fired electricity from Victoria's La Trobe Valley and the fact that a $200 million Victorian government support package could not stop it losing $US136.9 million between 2017 and 2019, which have raised concerns that it would be among the smelters to shut down when the government support package expires in June 2021.

But plunging power prices and government efforts to shield domestic manufacturing jobs amid this year's economic downturn due to the pandemic turned the chances of Portland Aluminium smelters towards survival.

Bill Oplinger, Alcoa’s CFO remained quite optimistic while speaking to the investors on 20^th November.

He said: “Talks over a new power contract – the major sticking point in Portland's future – should be finalised within months.”

''Portland is a great facility. It's good technology. It's one of our newer facilities and has a tremendous labour force ... but the issue there is getting a power contract,'' he said.

''So, we are in the process of having discussions with the power generators. We have an idea of what we need to get to be able to continue to operate that facility.”

''We want to put that facility in a position of success over the mid-term, not just breaking even, we want to be able to invest in that facility and make it a facility that is there for the long term.”

''We're going through those discussions now with the power buyers and we should know something over the next few months.''

The Victorian government is set to hand down its state budget next week, talks between the smelter owners and the federal government over ways to "repower" the Portland smelter is continuing.

Alcoa Australia effectively owns 33% of Portland, and China's Citic and Japan's Marubeni each own 22.5%, and ASX-listed Alumina Limited owns 22%.