Australian aluminum industry is struggling on the brink of life and death.

Published: Sep 16, 2020 16:18

Source: Mandarin Finance and Economics

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[Australian Aluminum is on the brink of life and death] Australia's aluminium smelters are being excluded from the global market because of high energy costs, unless they can find a way to generate cheaper electricity, according to the head of an international aluminium producer. Or face closure. "any aluminum producer will take a very serious look at the viability of their factories," said Miles Prosser, director of the (IAI) of the International Aluminum Association. "if you look at comparisons of global electricity prices, which are key determinants of smelter competitiveness, Australia is currently at a fairly high level."

SMM: Australian aluminum smelters are being excluded from the global market because of high energy costs and will face closure unless they can find a way to generate cheaper electricity, according to the head of an international aluminum producer.

The warning comes as smelters around the world are under pressure from falling demand triggered by the novel coronavirus epidemic, which has become one of London's worst-performing base metals. Australia produced more than 1.5 million tonnes of aluminium in the year to June 2020, ranking sixth in the world, according to government estimates.

"any aluminum producer will take a very serious look at the viability of their factories," said Miles Prosser, director of the (IAI) of the International Aluminum Association. "if you look at comparisons of global electricity prices, which are key determinants of smelter competitiveness, Australia is currently at a fairly high level."

High electricity prices raise the cost of the country's smelters. The country's industry is still paying too much for natural gas, which is the main driver of wholesale electricity prices. The national competition regulator said it reported in August that although prices fell in 2020, the decline was not consistent with a larger decline in the global LNG market.

Long before the outbreak, Alcoa (Alcoa) had been evaluating options at its Portland plant. Alcoa is likely to close the smelter after a four-year financial support agreement with the government expires next year. Three of Rio Tinto's smelters, including the largest in Tomago, are also under threat after commodities giant (Rio Tinto) announced the closure of its smelter in Cape Tivai, New Zealand, earlier this year.

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