No sign of improvement on the status of Point Henry smelter

Adverse market conditions confronting Alcoa's ageing Point Henry plant have not improved since the company announced a review of its Geelong smelter three months ago, with any relief from the falling dollar offset by weakening aluminium prices.

Shortly after the review was announced in February, union leaders urged the federal government to prop up the plant, arguing it would be profitable once the dollar returned to parity with the greenback.

The dollar dipped beneath the $US1 mark last week, giving hope to struggling manufacturers in other industries. However, an analysis of currency and aluminium movements by the Australian Aluminium Council shows the outlook for Point Henry and its 600 workers remains bleak.

"The company was pretty open and honest about the situation when it announced the review and what this graph is saying is those market conditions aren't a lot better now than they were back in February," AAC chief executive Miles Prosser said.

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"Things are probably as grim now as they were then. I know the company is trying a heap of stuff to find ways to be viable at those sorts of prices but certainly there has been no price relief in the last few months."

The cash price for a tonne of aluminium on the London Metal Exchange slumped last week to a near two-year low, with softening demand from China aggravating a global glut of the metal.

While the dollar has fallen by nearly 10 per cent since Alcoa placed Point Henry under review, each tonne of aluminium produced at Point Henry is worth less, in Australian dollars, than it was then.

A company representative said last week Alcoa would make no public comment on the future of Point Henry until the review was completed at the end of next month.

Senior management addressed staff at the Geelong smelter two weeks ago, in part to "manage expectations" about the viability of the 49-year-old plant.

The staff briefings followed optimistic comments by Australian Workers Union state secretary Cesar Melham after he held meetings with Alcoa at the company's US headquarters in Pittsburgh.

Mr Melham said the union had developed a model for the plant to continue operating with a reduced workforce, in exchange for investment in new technology.

Under the AWU proposal, about 50 jobs would be lost.

Mr Prosser said that with plentiful bauxite and access to cheap electricity, Australia should have a strong aluminium industry. But he warned the tough conditions facing Australian producers would continue for up to two years.

Mr Prosser reiterated his concern that the introduction of the carbon tax and continuation of the renewable energy target, while not key factors in Point Henry and Hydro's Kurri Kurri plant in the NSW Hunter Valley being placed under review, were looming issues for aluminium producers.