The Government of Australia will step in as shield for Alcoa’s struggling Portland Aluminium smelter in Victoria to relieve pressure on the power grid, as reported by two ministers on December 14.
The government has decided to underwrite up to A$76.8 million ($57.94 million) in revenue earned by the Alcoa Corp-owned aluminium smelter, which feeds 10% of Victoria's electricity needs, to 2025.
Angus Taylor, Minister for Energy and Emissions Reduction said: "The Portland aluminium smelter provides unique and valuable energy services and emergency reserves to the grid, particularly over summer."
The Victorian aluminium smelter has been accredited as a lifeline for hundreds of workers, but as a lost opportunity to move towards renewable energies.
The Australian Workers' Union Victorian branch secretary, Ben Davis, has welcomed the subsidy as good news for the 600 people employed at the smelter.
He said that over the past five years the smelter had been forced to power down over summer and, as a result, the company's production levels and income had dropped.
Dan Tehan, MP of Wannon, an electoral division in the state of Victoria, said: “this would enable power to be returned to the grid, without Alcoa losing income.”
Mr Tehan, added: “The funding would ensure the state's fuel security by enabling Alcoa to get a payment which would be consistent with what they would get if normal production was able to continue.”
"Portland aluminium smelter is unique in that it acts like a giant battery for the grid, while at the same time producing export income for the nation," he said.
Mr Tehan said: “If the smelter were to close, Victorians would face higher electricity prices. If it closed, it's entirely likely we could lose another coal-fired power generator, and that would see prices go up and put more instability in the grid," he said.
He concluded: “The subsidy package would ensure base-load power remained in the grid, while additional renewables were brought online.”
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