Alcoa MD highlights gas supply issues

The Australian managing director of Alcoa, Alan Cransberg, has called for Australia to use its natural gas supply more effictively.

Speaking at an American Chamber of Commerce lunch yesterday, Cransberg said that Australia should stop treating itself like a quarry and use its gas supply more intelligently.

"If we want to be a country with a diversified economy, then we have to have energy," said Cransberg, in comments reported by The Australian.

"I continually worry about whether we are just a quarry for the rest of the world or are we clever enough to combine some of the huge natural advantages we have.”

The Alcoa executive compared Australia unfavourably to the United States, where shale gas was helping create three million jobs, while in Australia “we want to pump it offshore”.

Cransberg's comments follow calls this year by those including the Prime Minister's manufacturing taskforce, the Australian Workers Union's Paul Howes, Dow Chemical's Andrew Liveris and others for a gas reservation policy, which has been ruled out by federal industry minister Greg Combet.

Aluminium makers have suffered under energy costs, low prices for their product and the high Australian dollar.

Cransberg said that three LNG plants being built in Gladstone, Queensland, would export most of their coal seam gas, which could lead to local shortages and price spikes.

He also said that the Western Australian government's policy of reserving 15 per cent of gas for local use was insufficient.

"It's fine reserving gas, but we need to make sure there is some formula for gas coming out of the ground commensurate with how much LNG is coming out," he claimed.

Gas export was the subject of a Plastics and Chemicals Industries Association and Australian Industry Group report released last month.

The paper concluded that each petajoule of gas exported earned $12 million but cost $255 million “in lost industrial output”.