Theherald.com.au
Electricity subsidy is the key to revive Australia’s struggling aluminium industry
Edited by : AL CIRCLE
2 min read
The deregulation of the electricity industry is emerging as an increasingly important factor in the future of Australia’s struggling aluminium industry.
Power prices were named as a second-tier issue last week when Norwegian firm Norsk Hydro said low metal prices and the high Australian dollar were the main reasons behind its decision to close the 43-year-old Kurri Kurri smelter. Green advocates of renewable energy have long criticised aluminium smelting as a drain on the economy, but pro-industrial academics say the aluminium industry can justify its discounted power bills.
Professor of Engineering Mathematics at Swinburne University of Technology, Geoffrey Brooks, said the description of aluminium as ‘‘congealed energy’’ had a degree of truth given the amount of electricity it took to make.
But aluminium was highly recyclable and had other benefits that meant the debate was far more complex than putting ‘‘green’’ views on one side and aluminium on the other.
Professor Brooks said smart countries worked to make high value materials in more sustainable ways.
Australia’s ample supplies of bauxite gave us a natural advantage in aluminium production but instead we were increasingly selling the ore to China and other nations and buying the goods back in return.
Grattan Institute director Tony Wood said charging aluminium smelters normal wholesale rates for their power would add about 50per cent to their electricity costs.
The unwinding of long-term cross-subsidies in the power industry is part of a deregulation process being overseen by regulators.
Tomago has power security until 2028 but Kurri’s contract expired in 2017 and it has been unable to cut a new deal at an acceptable price.
A 2010 Grattan Institute report said Tomago was one of the most efficient smelters in the world.
Power prices were named as a second-tier issue last week when Norwegian firm Norsk Hydro said low metal prices and the high Australian dollar were the main reasons behind its decision to close the 43-year-old Kurri Kurri smelter. Green advocates of renewable energy have long criticised aluminium smelting as a drain on the economy, but pro-industrial academics say the aluminium industry can justify its discounted power bills.
Professor of Engineering Mathematics at Swinburne University of Technology, Geoffrey Brooks, said the description of aluminium as ‘‘congealed energy’’ had a degree of truth given the amount of electricity it took to make.
But aluminium was highly recyclable and had other benefits that meant the debate was far more complex than putting ‘‘green’’ views on one side and aluminium on the other.
Professor Brooks said smart countries worked to make high value materials in more sustainable ways.
Australia’s ample supplies of bauxite gave us a natural advantage in aluminium production but instead we were increasingly selling the ore to China and other nations and buying the goods back in return.
Grattan Institute director Tony Wood said charging aluminium smelters normal wholesale rates for their power would add about 50per cent to their electricity costs.
The unwinding of long-term cross-subsidies in the power industry is part of a deregulation process being overseen by regulators.
Tomago has power security until 2028 but Kurri’s contract expired in 2017 and it has been unable to cut a new deal at an acceptable price.
A 2010 Grattan Institute report said Tomago was one of the most efficient smelters in the world.
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