Smelters are under threat, claims Alcoa

US aluminium giant Alcoa has warned that Victoria's two aluminium smelters face a "significant threat" because of the soaring Australian dollar, high input costs and the carbon tax, raising fears of further job losses in the crisis-hit manufacturing industry.

Victorian Treasurer Kim Wells met Alcoa officials yesterday amid serious concerns about potential job losses and the impact of the federal government's planned carbon tax. Alcoa employs about 1200 people at the smelters and is also Victoria's biggest exporter, The Australian reports.

While Alcoa will receive assistance under a $9.2 billion carbon tax package for manufacturers, the company estimates it faces extra costs of more than $40 million yearly because the smelters use extraordinarily large amounts of emissions-intensive brown-coal electricity. "It is correct to say that the combination of the above situation, adverse foreign exchange and high input costs are a significant threat to the future viability," the company has told a parliamentary committee.

The comments by Tim McAuliffe Alcoa of Australia's general manager of climate strategy and federal government relations are contained in a question on notice received last week by the Senate select committee inquiry into the carbon price.

Yesterday, Mr Wells said he was aware of the concerns held by Alcoa about the potential impacts of the tax. "The (state) Coalition government is aware of Alcoa's specific and legitimate concerns," Mr Wells said. "This is another example of the Gillard government refusing to recognise the flaws of their policies and penalising Victorian businesses and families."

Jobs losses at Alcoa would have a devastating impact on the economy of Portland in Victoria's southwest, he said.