Almost 1,000 jobs could be lost at Alcoa’s Geelong aluminium smelter due to the high Australian dollar, input costs and low metal prices, the company has announced.
Alcoa is currently “review[ing] the future viability” of its Point Henry Smelter in Victoria, which employs 900 people.
The troubled manufacturer is blaming “current global economic conditions” for the tough decision, which could see Victoria’s largest exporter close one of its local operations.
Though the company has stipulated the carbon tax is not the culprit for its troubles, Alcoa managing director Alan Cransberg said: “A combination of factors, including metal prices, input costs and exchange rates, have resulted in the Point Henry smelter becoming unprofitable.”
Just last week, the aluminium operation reported fourth quarter operating losses of $193 million, with revenue down 7% to $6 billion.
“Together with our employees, we have worked hard to minimise costs and improve margins, but the current situation makes it difficult for Point Henry to be globally competitive in the foreseeable future,” said Cransberg.
According to Cransberg, Alcoa will do everything it can to ensure the Geelong smelter doesn’t close-down, however operating conditions are so tough that it is possible the company will announced job cuts in the coming months.
“Our goal is for Point Henry to continue operating and meet its profitability targets. However one possible outcome of the review is that production at Point Henry may be curtailed,” he said.
“I know this is unsettling news that creates uncertainty for our employees and the many people that depend on the smelter for their livelihood.
“We will do all we can to ensure the smelter is competitive.”
Cransberg claims Alcoa will complete its company review by the end of June, at which time it will make a decision about the smelter’s future.
Established in 1963, the Smelter was one of the first plants in Australia to produce primary aluminium for domestic and international markets, Alcoa says. Today it produces 190,000 tonnes of aluminium a year, and its website claims it is one of the world’s most efficient smelters.
The Geelong smelter is based on the same site as the company’s aluminium rolling mill at Point Henry, and Anglesea power station.
Alcoa claims neither of these sites are included in the review, even though around 45% of the aluminium produced at the smelter is sold to the neighbouring Alcoa Australia Rolled Products plant, where aluminium is rolled into sheet.
The AWU is currently imploring the government to “take action” by providing bail-out options for Alcoa.
According to AWU Victoria secretary, Cesar Melhem, Alcoa has a ‘long-term, and highly profitable operation which should not be under threat as a result of short-term pressures’.
"There should be urgent talks at the highest levels of government to prevent this major employer and exporter from doing a slash and burn without consideration for the workers and the state that has supported it," Melhan said.
The AWU blames Alcoa for treating its Geelong facility with ‘corporate contempt’.
"If Alcoa had reinvested some of its profits into the plant, it would not be under threat now. It is an ageing facility which has been treated with corporate contempt," Cesar said.
"It should have been upgraded during the many, many good years. The company’s lack of investment in Point Henry amounts to exploitation of the people of Victoria, and of Geelong in particular.
"To turn around now and consider cut-backs, or worse, is outrageous, particularly in the light of the assistance given the company over the years in terms of energy concessions."