Australia offers A$76.8m support for Portland smelter

AUSTRALIA’S Government has agreed to provide A$76.8m (US$59.5m) in funding in a bid to secure the future of Alcoa’s Portland aluminium smelter in Victoria. The move could help save 600 jobs and provide stability to the energy grid.

The future of the Portland site came into question in October 2019 as Alcoa announced it would review its global smelting capacity under plans to sell assets worth up to US$1bn over 12–18 months. This included a target for renewable energy to power 85% of its smelting portfolio.

The Portland smelter is powered by electricity from coal-fired generators, and its activities are ramped up and down to balance fluctuations in demand from across the state. The smelter is a major user of electricity, responsible for around 10% of Victoria’s demand.

“The Portland aluminium smelter provides unique and valuable energy services and emergency reserves to the grid, particularly over summer,” said Angus Taylor, Minister for Energy and Emissions Reduction.

“It is three times larger than the largest battery in Australia and has been vital to avoiding blackouts in previous summers.”

With subsidies for the plant set to end next year, the Government funding would ensure Alcoa will be paid for its load-shedding activities to 2025.

“If Portland were to close it would risk the reliability and security of the grid, and may lead to the early closure of one of the coal-fired generators the state relies on for much of its power,” said Dan Tehan, the Member of Parliament for Wannon, Victoria.

“If another coal-fired generator closes early, it would mean higher electricity prices for all Victorian consumers as it did when the Hazelwood power plant closed in 2017.”

The payment does not guarantee the future of the smelter. While Alcoa has said it is encouraged by the proposal, it is still in talks with the state government and industry about securing a competitive energy supply deal, the Sydney Morning Herald reports.

Bruce Mountain, Director of the Victoria Energy Policy Centre, told ABC News that the Government has missed an opportunity to improve the green credentials of Victoria’s power by making its funding to Alcoa conditional on a transition to renewable energies. Government statistics show that coal generated 76% of energy in Victoria in 2018, down from 85% in 2016, with the fall due to the closure of the Hazelwood power plant.